Today, you observe the following spot rates: Maturity (years) Spot rate 0.5 4.0% 1 4.3% 1.5 5.1%
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Question:
Today, you observe the following spot rates:
Maturity (years) | Spot rate |
0.5 | 4.0% |
1 | 4.3% |
1.5 | 5.1% |
2 | 5.5% |
(All rates are annualized on a semi-annual bond equivalent yield basis and so should be your answers)
What is the 1-year rate the market expects six months from now? (hint: it is a forward rate):
Enter the result in percentage points (For example, if you find 10.00% or 0.1, write 10 as the answer), round your answer to 2 decimal points
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