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Question 4. a) The one-year and two-year zero rates are 1% and 2% respectively. What is the one-year forward one-year rate (that is, fu? Assume

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Question 4. a) The one-year and two-year zero rates are 1% and 2% respectively. What is the one-year forward one-year rate (that is, fu? Assume all rates are annually compounded. (This is a favorite question for interviewers.) b) If the two-year forward one-year rate f21 is 3%, what is the three-year zero rate

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