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Consider the following spot rate curve: 6-month spot rate: 4%. 12-month spot rate: 11%. 18-month spot rate: 13%. What is the forward rate for a

Consider the following spot rate curve:

  • 6-month spot rate: 4%.
  • 12-month spot rate: 11%.
  • 18-month spot rate: 13%.

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.

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