Forward Rates An analyst gathers the following information:
|
Years to Maturity |
Spot Rate |
|
1 |
5.00% |
|
2 |
6 |
|
3 |
6.5 |
Based on the data above, the one year implied forward rate two years from now is closest to:
a. 6.25 percent
b. 7.01 percent
c. 7.26 percent
d. 7.51 percent