Note of the formatting: For the first part if the formula is in the parantheses is means sub#, if it is outside of it it is squared.

Choose the formula for one-year forward rate. a) (1+r1)*(1+r2)2-1 b) (1+r2)(1+r1)2-1 c) (1+r1)(1+r2)2-1 d) (1+r2)2(1+r1)-1 e) (1+r1)2(1+r2)-1 What is the one closest to one year forward rate when 1 year spot rate is 5% and 2 year spot rate is 5.5% a) 4 Percent b) 3 Percent c) 6 Percent d) 5 Percent