Given the following pattern of forward rates: $$\begin{array} { c c }
\text { Year } & \text { Forward Rate } \
1 & 5 \% \
2 & 6 \% \
3 & 6.5 \%
\end{array}$$
If one year from now the term structure of interest rates changes so that it looks exactly the same as it does today,what would be your holding period return if you purchased a 3-year zero coupon bond today and held it for one year?

Question

Given the following pattern of forward rates: $$\begin{array} { c c } 
\text { Year } & \text { Forward Rate } \
1 & 5 \% \
2 & 6 \% \
3 & 6.5 \%
\end{array}$$
If one year from now the term structure of interest rates changes so that it looks exactly the same as it does today,what would be your holding period return if you purchased a 3-year zero coupon bond today and held it for one year?

Quizplus · Accepted Answer

The Answer of Given the following pattern of forward rates: $$\begin{array} { c c } 
\text { Year } & \text { Forward Rate } \
1 & 5 \% \
2 & 6 \% \
3 & 6.5 \%
\end{array}$$
If one year from now the term structure of interest rates changes so that it looks exactly the same as it does today,what would be your holding period return if you purchased a 3-year zero coupon bond today and held it for one year?

Given the Following Pattern of Forward Rates Year Forward Rate 15%26%36.5%\begin{array} { c c } \text { Year } & \text { Forward Rate } \\1 & 5 \% \\2 & 6 \% \\3 & 6.5 \%\end{array} Year 123​ Forward Rate 5%6%6.5%​

Given the Following Pattern of Forward Rates $\begin{array} { c c } \text { Year } & \text { Forward Rate } \\1 & 5 \% \\2 & 6 \% \\3 & 6.5 \%\end{array}$