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Basic Question 4 of 5
Using the rates of z1= 3.00%, f1,1= 3.60%, f2,1= 3.92%, f3,1= 5.15%, compute the period three (1.5 years) spot rate. fn,m refers to forward rate starting from period n for m period(s).
B. 3.506%
C. 5.352%
A. 1.784%
B. 3.506%
C. 5.352%
User Contributed Comments 7
| User | Comment |
|---|---|
| ramdabom | Do you need to use the semi-annual rates? |
| charlie | yes you need to use semi-annual rates. |
| mountaingoat | i need help in how the equation for z3 was derived from: (1+ jFk)^(k-j) formula from the study notes. |
| surjoy | Look @ CFA volume 5 book. page no. 458 |
| Richie188 | curriculum page 426 |
| bammi1 | This could more easily be solved as [(1+.03)(1+.036)(1+.0392)]^(1/3) this way you don't have to remember to multiply your answer by 2. |
| CFALucille | bammi1- thanks, you're right, there's no weird compounding or anything to worry about; it's exactly the same |
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
define par and forward rates, and calculate par rates, forward rates from spot rates, spot rates from forward rates, and the price of a bond using forward rates
CFA® 2025 Level I Curriculum, Volume 4, Module 9.