Assume that as of today, the annualized interest rate on a three-year security is 3 percent, while the annualized interest rate on a two-year security is 2.15 percent. Use this information to estimate the one-year forward rate two years from now.
Assume that as of today, the annualized interest rate on a three-year security is 3 percent, while the annualized interest rate on a two-year security is 2.15 percent. Use this information to estimate the one-year forward rate two years from now.
Chapter9: Forecasting Exchange Rates
Section: Chapter Questions
Problem 1ST
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Assume that as of today, the annualized interest rate on a three-year security is 3 percent, while the annualized interest rate on a two-year security is 2.15 percent. Use this information to estimate the one-year forward rate two years from now.
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