24-84 What is the forward one-year discount yield expected next year?
A)5.013 percent.
B)5.530 percent..
C)4.500 percent.
D)5.000 percent.
E)4.950 percent.

Question

Quizplus · Accepted Answer

To calculate the forward one-year discount yield, we need to use the formula:
Forward yield = ((1 + spot rate)^2 / (1 + forward rate)^1) - 1
Using the provided spot rates, we can calculate the forward rates:
- One-year forward rate: ((1 + 0.055)^2 / (1 + x)^1) - 1 = 0.0615
Solving for x, we get a one-year forward rate of 5.53%. Therefore, the answer is B.

24-84 What Is the Forward One-Year Discount Yield Expected Next