Suppose you want to detemine the forward rates for your client, a lender who is...
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Suppose you want to detemine the forward rates for your client, a lender who is considering a Forward Rate Ageement ( FRA). You have collected and organized the data for the risk-free zero interest rates with continuous compounding in the following table:
Maturity( years) Zero Rate (% per annum) 1223344657
What is the forward rate for the 4th year? (sample answer: 2.50%) What is the forward rate for the 5th year? (sample answer: 2.50%)
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