a. Using the theoretical spot rates in Table 11-2, calculate the two-year forward rate four years from now.

b. Verify the answer by assuming an investment of \(\$ 100\) is invested for six years.

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Table 11-2 Theoretical Spot Rates Maturity (years) 0.50 1.00 1.50 2,00 2,50 3.00 3,50 4.00 4.50 5.00 5.50 6.00 6.50 7.00 7.50 8.00 8.50 9.00 9.50 10.00 Yield to Maturity 0.0800 0.0830 0.0890 0.0920 0.0940 0.0970 0.1000 0.1040 0.1060 0.1080 0.1090 0.1120 0.1 140 0.1160 0.1180 0.1190 0.1200 0.1220 0.1240 0.1250 Theoretical Spot Rate 0.08000 0.08300 0.08930 0.09247 0.09468 0.09787 0.10129 0.10592 0.10850. 0.11021 0.11175 0.11584 0.11744 0.11991 0.12405 0.12278 0.12546 0.13152 0.13377 0.13623