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Present clearly the calculation of each correspondent questions QUESTION 2 A A bond is...

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Present clearly the calculation of each correspondent questions

QUESTION 2 A A bond is selling at $950 today. The interest rate is 6% per annum (continuously compounded). What is the price of a six-month forward contract? (5 marks) The price of the bond is $960, two months from today. What is the value of the contract 2 months from today? (10 marks) B A share is selling at $50 today. The interest rate is 8% per annum on a continuously compounded basis. The share is expected to pay a dividend of $0.75 at the end of 6 months. What is the price of a 10-month forward contract? Show your workings. (10 marks) The price of the share is $60, three months from today. What is the value of the contract three months from today? Show your workings. (15 marks) Discuss the similarities and differences between futures contracts and forward contracts. (10 marks)

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