Calculate the forward rate for year two

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Reference no: EM131948648

1. The following data is available from the term structure of

Interest rates.

Current yield to maturity on one year bonds = 1.5%

Current yield to maturity on two year bonds = 2%

Calculate the forward rate (f2) for year two.

2. A semiannual, 6 percent bond matures in 14 years and has a face value of $1,000. The market quote on this bond is 1,030. What is the aftertax cost of debt if the tax rate is 34 percent?

6.14 percent

5.56 percent

3.53 percent

3.75 percent

Reference no: EM131948648

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