5.3.Hull Ch 4
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London Inter-Bank Offered Rate: used to value derivatives securities whose counterparties are not completely free of default risk
Bootsrap method to determine zero rates
Solve equation P = ∑CFt e-Rit
Value of FRA (Forward Rate Agreement)
Value of FRA = L(Rk - RF)(T2 - T1)e-R2T2
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