What is the implied 1-year forward rate next year

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1. If the one-year interest rate today is 2% and the two-year rate is 3%, what is the implied 1-year forward rate next year?

2. You purchase a twenty-year, 5% coupon bond with a face value of 100 at a yield-to-maturity of 5%. At the end of your two-year horizon you sell the bond at a yield of 4.5%. What is your rate-of-return if you reinvested at 4.5%?

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Reference no: EM133068573

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