Consider a two-year loan beginning in one year (A = 1, B = 3). The one-year spot
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Consider a two-year loan beginning in one year (A = 1, B = 3). The one-year spot rate is z1 = zA = 7% = 0.07. The three-year spot rate is z3 = zB = 9% = 0.09.
Calculate the one-year discount factor: DFA = DF1.
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