Assume zero-coupon bond prices are B(0,0)= $1,B(0,1)= $0.967846,B(0,2)= $0.943010.What is the forward rate f (0,1)?

Name: Assume zero-coupon bond prices are B(0,0)= $1,B(0,1)= $0.967846,B(0,2)= $0.943010.What is the forward rate f (0,1)?
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Question

Quizplus · Accepted Answer

The forward rate f(0,1) can be found using the formula:

f(0,1) = (S1/B(0,1)) - 1

Substituting the given values, we get:

f(0,1) = (1/0.967846) - 1 = 0.03299

Rounding to four decimal places, the answer is 0.0332, which matches with Choice C.

Assume Zero-Coupon Bond Prices Are B(0,0)= $1,B(0,1)= $0