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Forecasting interest rates based on unbiased expectations

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Problem in Forecasting Interest Rates based on unbiased expectations theory

These are the rates today (Jan 10, 2020) for loans of equal risk.

R1 = 1.5%

R2 = 2.5%

R3 = 3%

R4 = 4%

A. Given this information, calculate the one-year forward rate for a one-year loan beginning 1/10/21 and ending on 1/10/22

B. Calculate the two-year forward rate for a one-year loan beginning 1/10/22 and ending on 1/10/23

C. Calculate the three-year forward rate for a one-year loan beginning 1/10/23 and ending on 1/10/24

D. Calculate the two-year forward rate for a two-year loan beginning 1/10/22 and ending on 1/10/24

Reference no: EM132442091

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