Question

A.) Consider the following spot interest rates for maturities of one, two, three, and four years....

A.)

Consider the following spot interest rates for maturities of one, two, three, and four years.

           r1 = 5.3%    r2 = 5.9%     r3 = 6.6%     r4 = 7.4%

What are the following forward rates, where f1, k refers to a forward rate for the period beginning in one year and extending for k years? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

B,)

Consider the following spot interest rates for maturities of one, two, three, and four years.

            r1 = 4.1%    r2 = 4.5%     r3 = 5.2%     r4 = 6.0%

What are the following forward rates, where fk,1 refers to a forward rate beginning in k years and extending for 1 year? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

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