EBK CFIN
6th Edition
ISBN: 9781337671743
Author: BESLEY
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 5, Problem 10PROB
Summary Introduction
Expectation theory:
Expectation theory is used to find forward interest rate based on the prevailing long term interest rates.
Calculate the forward rate as follows:
Given five year Treasury bond rate is 3.1%, six year Treasury bond rate is 2.9% and seven year Treasury bond rate is 2.6%.
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