Suppose that Treasury bills maturing in 3 months, 6 months, and 1 year are selling for $99.75, 99.25 and 98.75, respectively; and a Treasury note maturing in 1 and half years paying a 4% semiannual coupon is selling at par. Construct the forward curve for periods extending out to 1.5 years. Interpret what these rates are telling you.

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Answer Forward Curve for Periods Extending Out to 15 Years The forward curve for periods extending o... View the full answer