In order to estimate the forward rate for year 1.5 one needs which of the following?
I.1-year zero
II.1.5-year zero
III.2-year zero
A)I, III
B)I, II, III
C)I, II
D)II, III

Question

Quizplus · Accepted Answer

To estimate the forward rate for year 1.5, you would need the 1-year zero and the 1.5-year zero. The 2-year zero is not necessary as it is too far in the future to inform the forward rate for year 1.5. Therefore, choices I and II are necessary while choice III is not.

In Order to Estimate the Forward Rate for Year 1