Fight Finance

Courses  Tags  Random  All  Recent  Scores

Scores
keithphw$5,571.61
an4_bolt$4,066.43
Visitor$800.00
Visitor$630.00
Visitor$490.00
tomtomtom$453.98
Visitor$410.00
Visitor$360.00
Visitor$340.00
Visitor$281.54
Jayt$280.00
Visitor$260.00
Visitor$250.00
Visitor$230.00
Visitor$230.00
Visitor$230.00
Visitor$220.00
Visitor$210.00
Visitor$210.00
Visitor$190.00
 

Question 25  bond pricing, zero coupon bond, term structure of interest rates, forward interest rate

A European company just issued two bonds, a

  • 2 year zero coupon bond at a yield of 8% pa, and a
  • 3 year zero coupon bond at a yield of 10% pa.

What is the company's forward rate over the third year (from t=2 to t=3)? Give your answer as an effective annual rate, which is how the above bond yields are quoted.




Copyright © 2014 Keith Woodward