Compute the prepaid swap price for corn


Zero-coupon bond yields are 5.2%, 5.5%, and 5.8% for redemption in 1, 2, and 3 years, respectively. Assume corn forward prices are $2.10, $2.20, and $2.35 for delivery in 1, 2 and 3 years, respectively. Calculate the prepaid swap price for corn.

(a) About $5.96

(b) About $6.04

(c) About $6.12

(d) About $6.20

(e) None of the above.

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Finance Basics: Compute the prepaid swap price for corn
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