In the relationship below for rolling rates, where rs₁ and rs2 are the 1 and 2y spot rates respectively: (1 + rs₁)(1 + ₁rf2) = (1 + rs₂)² What is rf₂? A. B. C. D. The 2-year forward rate in one year's time. The 1-year forward rate in two year's time. The 2-year forward rate in two year's time. The 1-year forward rate in one year's time.

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Can you answer the question in the picture, please?

In the relationship below for rolling rates, where rs₁ and rs2
are the 1 and 2y spot rates respectively:
(1 + rs₁)(1 + ₁rf2) = (1 + rs₂)²
What is rf₂?
A.
B.
C.
D.
The 2-year forward rate in one year's time.
The 1-year forward rate in two year's time.
The 2-year forward rate in two year's time.
The 1-year forward rate in one year's time.
Transcribed Image Text:In the relationship below for rolling rates, where rs₁ and rs2 are the 1 and 2y spot rates respectively: (1 + rs₁)(1 + ₁rf2) = (1 + rs₂)² What is rf₂? A. B. C. D. The 2-year forward rate in one year's time. The 1-year forward rate in two year's time. The 2-year forward rate in two year's time. The 1-year forward rate in one year's time.
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