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(c) In a specific term structure of interest rates, the spot rate is defined by s4 = 0.1(0.9)for t = 1, 2, 3, 4, 5.
(c) In a specific term structure of interest rates, the spot rate is defined by s4 = 0.1(0.9)for t = 1, 2, 3, 4, 5. Compute the (i) 2-year forward rate, one year from now, (1 mark) (ii) 3-year forward rate, two years from now. (1 mark)
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