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What rate of interest on one year loan starting three year

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Reference no: EM132701301

Problem 1: What is the rate of interest on a 1 year loan starting 3 years from now, implied by the following term structure:

(i) A 1-year zero coupon bond has a yield to maturity of 1%;

(ii) A 2-year zero coupon bond has a yield to maturity of 2%;

(iii) A 3 year zero coupon bond has a yield to maturity of 3%, and

(iv) A 4-year zero coupon bond has a yield to maturity of 4%

(In other words, show your calculation of the forward 1-year interest rate starting 3 years from now.)

Reference no: EM132701301

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