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Question 1: Suppose that you have the following interest rates: Time period (Years) Spot rate Forward rate Expected future single year spot rate 1 8.00
Question 1: Suppose that you have the following interest rates: Time period (Years) Spot rate Forward rate Expected future single year spot rate 1 8.00 2 8.75 ((1+8.75)/(1+8))-1=9. 56 3 9.33 ((1+9.33)/(1+8.75))-1 =9.94 9.79 ((1+9.79)/(1+9.33))-1 =10.27 5 10.13 ((1+10.13)/(1+9.79))- 1=10.48 Plot the yield curve based on these rates. Compute the forward rate and the expected future single period spot rate. Question 1: Suppose that you have the following interest rates: Time period (Years) Spot rate Forward rate Expected future single year spot rate 1 8.00 2 8.75 ((1+8.75)/(1+8))-1=9. 56 3 9.33 ((1+9.33)/(1+8.75))-1 =9.94 9.79 ((1+9.79)/(1+9.33))-1 =10.27 5 10.13 ((1+10.13)/(1+9.79))- 1=10.48 Plot the yield curve based on these rates. Compute the forward rate and the expected future single period spot rate
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