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Refer to the following table. Maturity (years) 1 ...

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Finance

Refer to the following table.

Maturity (years)

1

2

3

4

5
Zero-coupon

YTMn=rn

4.23%

5.57%

5.57%

4.89%

4.45%

What is the forward rate for year 3 (the forward rate quoted today for an investment that begins in two years and matures in three years)? What can you conclude about forward rates when the yield curve is flat?

What is the forward rate for year 3 (the forward rate quoted today for an investment that begins in two years and matures in three years)?

The forward rate for year 3 is __________%. (Round the final answer two decimal places. Round all intermediate values to four decimal places as needed.)

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