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If the 2-year zero spot rate is lower than the 1-year zero spot rate which of the following statement is the most correct? 1.The 1F2
If the 2-year zero spot rate is lower than the 1-year zero spot rate which of the following statement is the most correct?
1.The 1F2 forward rate will be lower than the 2-year zero spot rate, but higher than the 1-year zero spot rate.
2.The 1F2 forward rate will be lower than both zero spot rates.
3.The 1F2 forward rate will be higher than the 2-year zero spot rate, but lower than the 1-year zero spot rate.
4.The 1F2 forward rate will be higher than both zero spot rates.
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