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You are considering purchasing one of two assets. Asset 1 has payments of 5,000 at the end of year 1, 10,000 at the end of
You are considering purchasing one of two assets. Asset 1 has payments of 5,000 at the end of year 1, 10,000 at the end of year 3, and 15,000 at the end of year 5. The price for Asset 1 today is 26,000. Asset 2 has payments of 12,000 at the end of year 4 and 20,000 at the end of year 5. The price of the asset 3 years from now is 29,500. If the current spot curve is below, what is the one year forward rate, deferred three years? Term 1 2 3 4 5 Spot Rate 3.00% 3.40% 53 54 4.25% A 2.26% B 2.79% 3.71% D 5.45% E 4.73%
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