Estimate the forward interest rate in an fra
A Eurodollar futures quote for the period between 5.1 and 5.35 year in the future is 97.1. The standard deviation of the change in the short-term interest rate in one year is 1.4%. Estimate the forward interest rate in an FRA.
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Draw a graph showing the best response functions for firm 1 and firm 2 in (q1,q2) space. Show the two resulting equilibrium allocations should the firms produce.
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