The 6-month, 12-month, 18-month, and 24-month zero rates are 2%, 1.5%,1.75%, and 2% with semiannual compounding. What are the rates with continuous compounding? What is the forward rate for the 6-month period beginning in 18 months for both continuous and semiannual compounding. What is the value of an FRA that promises to pay you 2.6% (compounded semiannually) on a principal of $1 million for the 6-month period starting in 18 months?

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A: In valuation of FRA and in implementing FRA formula, following time line should be considered.

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