Question: 14. Based on arbitrage arguments give two interpretations for each of the following three forward rates: a. The 1-year forward rate seven years from now

14. Based on arbitrage arguments give two interpretations for each of the following three forward rates:

a. The 1-year forward rate seven years from now is 6.4%.

b. The 2-year forward rate one year from now is 6.2%.

c. The 8-year forward rate three years from now is 7.1%.

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