What is the value of an fra that enables the holder to earn, Financial Management

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What is the value of an fra that enables the holder to earn

Assuming that zero rates are as in Problem, what is the value of an FRA that enables the holder to earn 9.5% for a 3-month period starting in 1 year on a principal of $1,000,000? The interest rate is expressed with quarterly compounding.

Problem:
Suppose that zero interest rates with continuous compounding are as follows:

1372_Table 9.jpg

Calculate forward interest rates for the second, third, fourth, fifth, and sixth quarters.

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Financial Management: What is the value of an fra that enables the holder to earn

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