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You are provided with the following par yields, convertible half-yearly, currently applying in the fixed-coupon government bond market: Term to maturity Par yield 6 months

You are provided with the following par yields, convertible half-yearly, currently applying in the fixed-coupon government bond market:

Term to maturity Par yield

6 months 4.0% 12 months 5.0% 18 months 6.0%

Calculate the forward rate applicable to a six-month period commencing in 12 months time. Show your answer to the nearest 0.1% per annum convertible half-yearly.

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