Actually you have the following term structure of spot rates on the market Time(weeks) Interest rate 1 1.5% 2 1.8% 3 2.1

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answerhappygod
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Actually you have the following term structure of spot rates on the market Time(weeks) Interest rate 1 1.5% 2 1.8% 3 2.1

Post by answerhappygod »

Actually you have the following term structure of spotrates on the market
Time(weeks)
Interest rate
1
1.5%
2
1.8%
3
2.1%
4
2.2%
A)Calculate two chosen forward rates(according toexpectation theory) using compound interest ratemethod
B) If possible calculate (using simple interest ratemethod) the forward rate that starts in one week and three weeks.Ifnot possible comment why
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