The 4-year spot rate is 9.45%, and the 3-year spot rate is 9.85%. What is the 1-year forward rate three years from today?

 

The 4-year spot rate is 9.45%, and the 3-year spot rate is 9.85%. What is the 1-year forward rate three years from today?

Specifically, the theory states that investing at a long-term rate should yield the same return as investing at a series of short-term rates. The one-year forward rate three years from today is 8.26%. …

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