Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Pirovia, a country neighbouring Walcotia, has been experiencing severe economic difficulties and accordingly has much higher bond rates, illustrated in the table of annualised spot rates below:
1 year 23%
2 year 23.5%
3 year 24%
4 year 35%
5 year 40%
Calculate the annualised 3y2y forward rate, using semi-annual compounding
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