4.
Question 4
Relation between spot and forward
rates
Suppose the spot rates for 1 and 2 years are s1 = 6.3% s1=6.3%
and s2 = 6.9% with annual compounding. Recall that in this
course interest rates are always quoted on an annual basis unless
otherwise specified. What is the forward rate, f1,2 assuming
annual compounding?
Please submit your answer as a percentage rounded to one decimal
place so, for example, if your answer is 8.789% then you should
submit an answer of