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Explain arbitrage and its use in the valuation of forward contracts. Employ term structure of interest rates to calculate forward and spot rates.

PLEASE SEE THE ATTACHMENT
5 pages + 2 hours of preparationThe assigment should cover the below learning outcomes 5-7, relevent lecture notes and slides are attached to this email.
LO5. Analyse basic fixed interest financial transactions like Loan Valuation, Fixed Interest securities (eg. Bonds) and employ the skills developed in this course to evaluate such transactions. Incorporate the effects of taxation on such financial transactions.
LO6. Explain arbitrage and its use in the valuation of forward contracts. Employ term structure of interest rates to calculate forward and spot rates.
LO7. Define interest rate risk in terms of duration and convexity of fixed interest products. Define immunisation and assess its use in mitigating interest rate risk.
Details of task:
. Students are expected to complete this assignment individually. Students will need to upload the soft copy submission and are encouraged to use Excel to complete the assignment. T

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