What is a forward rate? Why might it be interesting to calculate implicit forward interest rates?

Calculate the implicit $2-$year forward rate in $3$ years based on the following table from today's yield curve:

$1$ year's interest

$2$ year interest

$3$ year interest

$4$ year interest

$5$ year interest

$4,093$

$3,759$

$3,569$

$3,462$

$3,406$

Show your calculations on above given information.

Answer rating: 100% (QA)

Forward Rates and Implicit Forward Rate Calculations A forward rate is the estimated interest rate f... View the full answer