Consider the following spot interest rates for maturities of one, two, three, and four years.r₁ = 4.3% 2 = 4.9%√3 = 5.6%r4 = 6.4%What are the following forward rates, where fkn refers to a forward rate beginning in k year(s) and extending for n year(s)?f2,1 = ?f3,1 = ?f2,2 = ?

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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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Consider the following spot interest rates for maturities of one, two, three, and four years. r₁ = 4.3% 2 = 4.9% √3 = 5.6% r4 = 6.4% What are the following forward rates, where fkn refers to a forward rate beginning in k year(s) and extending for n year(s)? f2,1 = ? f3,1 = ? f2,2 = ?