Question
Consider the following set of interest rates on zero-coupon bonds. Time (Years) Zero rate %p.a. 1 6.0 2 6.1 3 6.2 4 6.3 (a) How
Consider the following set of interest rates on zero-coupon bonds.
| Time (Years) | Zero rate %p.a. |
| 1 | 6.0 |
| 2 | 6.1 |
| 3 | 6.2 |
| 4 | 6.3 |
(a) How many forward rates are associated with these zero rates?
(b) Calculate the forward rates and discount factors.
(c) What is the relation between the zero rate curve and the forward rate curve?
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A Fast And Frugal Finance
Authors: William P. Forbes, Aloysius Igboekwu, Shabnam Mousavi
1st Edition
0128124954, 978-0128124956
