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Consider the following spot rate curve: 6-month spot rate: 6%. 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: 6%.
  • 12-month spot rate: 11%.
  • 18-month spot rate: 13%.

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.

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