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The current yield curve is inverted. The spot rates for zero-coupon bonds for the next few years are provided below. Due to a data glitch,
The current yield curve is inverted. The spot rates for zero-coupon bonds for the next few years are provided below. Due to a data glitch, the spot rate for this year (year 1) and the next year (year 2) are missing. What is the inferred short rate for the fifth year?
Year | 3 | 4 | 5 | 6 | 7 |
Spot rate (%) | 2.49 | 2.41 | 2.21 | 2.32 | 2.68 |
Group of answer choices
A. 4.87%
B. 2.87%
C. 2.17%
D. 1.41%
E. 9.02%
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