CFA Practice Question

There are 147 practice questions for this study session.

CFA Practice Question

Given the spot rates r(1) = 5%, f(1,1) = 5.5%, and f(2,1) = 6%, calculate r(3).
A. 5.25%
B. 5.5%
C. 5.7%
Explanation: [1 + r(3)]3 = [1 + r(1)] [1 + f(1,1)][1 + f(2,1)]

[1 + r(3)]3 = 1.05 x 1.055 x 1.06

r(3) = 5.5%

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