Answers to End-of-Chapter Questions
Answers to End-of-Chapter Questions
Answers to End-of-Chapter Questions
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54 Part 2 Fundamentals <strong>of</strong> Financial Markets<br />
e<br />
15. The expected one-year interest rate two years from now is i<br />
t + 2<br />
= [(1 + i 3t − k 3t ) 3 /(1 + i 2t − k 2t ) 2 ] − 1 =<br />
[(1 + 0.06 − 0.0035) 3 /(1 + 0.05 − 0.0025) 2 ] − 1 = 0.075 = 7.5%.
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