Determine b-a using forward rates denote the pv

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Reference no: EM13335713

$1000 is invested at the end of each year for 3 years, with given interest rates at time 1, 2, and 3 of 4.2%, 4.6%, and 5.1%, respectively. First, ssume that these are spot rates and let A denote the PV of the three $1000 payments, discounted using the spot rates. Second, assume that the given rates are forward rates and let B denote the PV of the three $1000 payments discounted using forward rates. Determine B-A.

Reference no: EM13335713

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