Loading...
CFA Level 2
Derivatives

Forward Pricing of a Bond

Medium Forward Pricing And Valuation Fixed Income Forwards

A fixed income investor is considering entering into a forward contract to purchase a bond that matures in exactly one year. The investor observes that the current spot price of the bond is $1,000, and the risk-free interest rate is 5% per annum (compounded annually). Given the information provided, what will be the forward price of the bond at the end of one year?

Hint

Submitted4.8K
Correct3.9K
% Correct81%