An investor enters a three-year swap contracts by paying fixed price and receive spot price...
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Finance
An investor enters a three-year swap contracts by paying fixed price and receive spot price of Apples stock at the end of each year. The spot price of Apples stock is $515 now, and the risk-free rate is 3%.
Draw the synthetic forwards contracts to mimicking this swap contract.
Compute the rational fixed price based on arbitrage-free principal.
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