These are the rates today (Jan 10, 2020) for loans of equal risk. R1 = 1.5% R2
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Question:
R1 = 1.5%
R2 = 2.5%
R3 = 3%
R4 = 4%
A. Given this information, calculate the one-year forward rate for a one-year loan beginning 1/10/21 and ending on 1/10/22
B. Calculate the two-year forward rate for a one-year loan beginning 1/10/22 and ending on 1/10/23
C. Calculate the three-year forward rate for a one-year loan beginning 1/10/23 and ending on 1/10/24
D. Calculate the two-year forward rate for a two-year loan beginning 1/10/22 and ending on 1/10/24
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Authors: Robert M. Schindler
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