Use the term structure below for problems 1 2:

Maturity	Spot Rate	Forward Rate
1	4.0%
2	4.25%
3	4.75%
4	5.25%
5	6.0%
6	6.75%

1. Calculate the 1-year forward rate as quoted today (year zero) for years 1, 2, 3, 4 & 5. Show each of the spot and forward rates on the time line below. (For simplicity, you can use annual compounding.)

0 1 2 3 4 5 6

|____________|____________|____________|____________|____________|____________|

2. Calculate the 2-year forward rate as quoted today (year zero) in year 1. Show the 2-year forward rate on a timeline and the relevant spot rates used to calculate the 2-year forward rate.

0 1 2 3 4 5 6

|____________|____________|____________|____________|____________|____________|