6) The current yield on a 1 year treasury bond is 1.02% and the current yield on a 3 year treasury bond is 1.61%. What is the expected semi-annual yield on a 2 year treasury bond, 1 year from today (forward rate)? Use $1,000 as your investment (PV).

Hint: As the exam instructions state, the rates given in this problem are annual. However, the solution (f variable) to the forward rate formula is a semi-annual rate. Use this semi-annual rate when choosing your answer. Do not convert the rate to annual. (CORRECT)

Group of answer choices

1.10%

.95%

.91%

.55%