The spot price of an investment asset is $35 and the risk-free rate for all maturities is 5% with continuous compounding. The asset provides an income of $2 at the end of the first year and at the end of the second year. Which of the below is closest to the three-year forward price? a. $35.84 b. $19.67 c. $40.50 d. $36.35

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Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.