Question: Using the forward curve below, determine the 2-year spot rate. Note, all rates are semi-annual APRs. The notation is consistent with what I used in

Using the forward curve below, determine the 2-year spot rate. Note, all rates are semi-annual APRs. The notation is consistent with what I used in class: Z indicates a spot rate, f a forward rate, and the subscripts indicate time periods in years.

Z 0 x 0.5 = 8.000% f 0.5 x 1 = 8.250% f 1 x 1.5 = 8.350% f 1.5 x 2 = 8.550%

a. 4.144% b. 8.287% c. 8.450% d. 4.275% e. 8.550%

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