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Compute the (annual) 1 year forward rate 6 months from today given the following information: Period Annual Spot Rate 6 mo. 5.0% 12 mo. 5.4%

Compute the (annual) 1 year forward rate 6 months from today given the following information:

Period Annual Spot Rate

6 mo. 5.0%

12 mo. 5.4%

18 mo. 5.8%

24 mo. 6.4%

Possible Answers:

3.10%

3.30%

6.60%

5.80%

6.20%

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