Forward Interest Rate
Not what you're looking for?
Calculate the 1.5-year theoretical spot rate if the 6-month spot rate is 1.75 percent and the 1-year spot rate is 1.95 percent. The 1.5-year note has a coupon of 3 percent and is selling for $101.3518. (Quotes are in decimals, not 32nds.)
Then based on the data and your calculations, calculate the six-month forward rate 1.0 year from now (1ï?¦2).
Purchase this Solution
Solution Summary
Calculates the 1.5 year theoretical spot rates and the six month forward rate.
Solution Preview
Please see the attached file:
Calculate the 1.5-year theoretical spot rate if the 6-month spot rate is 1.75 percent and the 1-year spot rate is 1.95 percent. The 1.5-year note has a coupon of 3 percent and is selling for $101.3518. (Quotes are in decimals, not 32nds.)
Then based on the data and your calculations, calculate the six-month forward rate 1.0 year from now .
Note: The quoted interest rates are annualized interest rates.
In the following calculations, we use annual compounding since interest on note is received every 6 months
6 month interest rate = annual interest rate /2
6 months = 1 time period, 1 ...
Purchase this Solution
Free BrainMass Quizzes
Transformational Leadership
This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.
Income Streams
In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.
Accounting: Statement of Cash flows
This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.
Writing Business Plans
This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.
Organizational Leadership Quiz
This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.