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    Spot Rates

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    Given the following forward rates, calculate the one,two,three and four year spot rates:

    Forward time period ----- Forward rate
    f0,1 ------- 10.0%
    f1,2 ------- 9.5%
    f2,3 ------- 9.0%
    f3,4 ------- 8.5%

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    https://brainmass.com/business/strategy-and-business-analysis/spot-rates-6724

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    The one year spot rate is the same as the forward rate from year 0 to 1 = 10.0%.
    The two year spot rate = [1.1 * 1.095] ^ (1/2) - 1 = 1.097 - 1 = 0.0975 = 9.75%.
    The three year spot rate = [1.1 * 1.095 ...

    Solution Summary

    This solution calculated the spot rates given the forward rates.

    $2.19

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