Mathematics, 01.03.2021 22:20, KingSavage278

Suppose that 3-month LIBOR is 5.6% and that 6-month LIBOR is 5.4%. You are offered a forward rate today r3,6 starting in 3 months and ending in 6-months of 5.8%. Suppose you are allowed to borrow or invest up to $1000 at the forward rate. Describe a way to make a guaranteed profit. How much is your profit?

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Suppose that 3-month LIBOR is 5.6% and that 6-month LIBOR is 5.4%. You are offered a forward rate to...