Th e one-year spot rate r (1) = 4%, the forward rate for a one-year loan beginning

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Th e one-year spot rate r (1) = 4%, the forward rate for a one-year loan beginning in one year is 6%, and the forward rate for a one-year loan beginning in two years is 8%. Which of the following rates is closest to the three-year spot rate?

A . 4.0%

B . 6.0%

C . 8.0%

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Fixed Income Analysis

ISBN: 9788126563128

3rd Edition

Authors: Barbara S. Petitt, Jerald E. Pinto, Wendy L. Pirie, Bob Kopprasch

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Question Posted: Oct 23, 2024 08:06 AM

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Th e one-year spot rate r (1) = 4%, the forward rate for a one-year loan beginning

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Fixed Income Analysis

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