CFA Practice Question
The 6 month spot rate is 4%, the 12 month spot rate 4.4%. What is the 6 month forward rate 6 months from now?
A. 2.4%
B. 4%
C. 4.8%
Explanation: 1.0222 = 1.02 x (1+r)
1+r = 1.024
But, don't forget to annualise, 2.4% x 2 = 4.8%.
1+r = 1.024
But, don't forget to annualise, 2.4% x 2 = 4.8%.
User Contributed Comments 1
| User | Comment |
|---|---|
| ninad123 | Yikes... forgot multiplying by 2 , good question |