$10\%$

Question $20(2$ points$)$

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Suppose the interest rate on a $1-$year T$-$bond is $5\mathrm{.}00\%$ and that $6\mathrm{.}00\%.$ Assume that the MRP is zero for a $1-$ year T$-$bond but $0\mathrm{.}4$ bond. Choose one closest to one$-$year forward rate $($the yield on expected to be one year from now$)?$

$5\%$

$5\mathrm{.}5\%$

$6\%$

$6\mathrm{.}5\%$

$7\%$