Question
1.Consider the following spot rate curve: 6-month spot rate: 7%. 12-month spot rate: 11%. 18-month spot rate: 14%. What is the forward rate for a
1.Consider the following spot rate curve:
- 6-month spot rate: 7%.
- 12-month spot rate: 11%.
- 18-month spot rate: 14%.
What is the forward rate for a 6-month zero coupon bond issued one year from today? Equivalently, the question asks for f12, where 1 time period consists of 6 months. Remember, like spot rates, forward rates are expressed as bond-equivalent yields.
Round your answer to 4 decimal places. For example if your answer is 3.205%, then please write down 0.0321.
2. Consider the following spot rate curve:
- 6-month spot rate: 8%.
- 12-month spot rate: 10%.
- 18-month spot rate: 14%.
What is the forward rate for a one-year zero coupon bond issued 6 months from today? Equivalently, the question asks for f21, where 1 time period consists of 6 months.
Assume semi-annual compounding. Round your answer to 4 decimal places. For example if your answer is 3.205%, then please write down 0.0321.
Assume semi-annual compounding. Round your answer to 4 decimal places. For example if your answer is 3.205%, then please write down 0.0321.
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Financial Management For Public, Health, And Not-for-Profit Organizations
Authors: Steven A. Finkler, Daniel L. Smith, Thad D. Calabrese, Robert M. Purtell
6th Edition
150639681X, 978-1506396811
