Question: The table below shows current one-year interest rate and current interest rates on multi-year bonds. What is the forward rate in year 2 (i.e., the

The table below shows current one-year interest rate and current interest rates on multi-year bonds. What is the forward rate in year 2 (i.e., the 1-year interest rate that is expected to prevail in year 2)?

Year

1-year

Bond Rate

Multi-year Bond Rate

3.5%

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