Consider the following US treasury rate table expressed in percentage. Maturity Yield Last Last Yesterday R(0,t) Week Month 6 Month 2.65 2.35 1.85 1.55 1 Year 2.75 2.70 2.20 1.90 2 Year 3.60 2.90 2.40 2.10 3 Year 4.00 4.65 4.15 3.85 5 Year 4.80 4.70 2.20 3.90 10 Year 5.00 4.90 4.40 4.10 30 Year 5.50 5.30 4.80 4.50 The forward rate F(2,1) is the rate that applies to borrowing or lending starting in 2 years from today for an additional year. F(2,1) today is equal to: Answer in percentage with two digits decimal accuracy. Example 10.34

Consider the following US treasury rate table expressed in percentage. Maturity Yield Last Last Yesterday R(0,t) Week Month 6 Month 2.65 2.35 1.85 1.55 1 Year 2.75 2.70 2.20 1.90 2 Year 3.60 2.90 2.40 2.10 3 Year 4.00 4.65 4.15 3.85 5 Year 4.80 4.70 2.20 3.90 10 Year 5.00 4.90 4.40 4.10 30 Year 5.50 5.30 4.80 4.50 The forward rate F(2,1) is the rate that applies to borrowing or lending starting in 2 years from today for an additional year. F(2,1) today is equal to: Answer in percentage with two digits decimal accuracy. Example 10.34

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter8: Relationships Among Inflation, Interest Rates, And Exchange Rates

Section: Chapter Questions

Problem 2IEE

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