Answer: 6.2%

## Explanation Using the formula for continuously compounded forward rates: $$F_{1,2} = \frac{Z_2 T_2 - Z_1 T_1}{T_2 - T_1}$$ Where: - $Z_1$ = 3-year zero rate = 4.6% = 0.046 - $T_1$ = 3 years - $Z_2$ = 4-year zero rate = 5.0% = 0.050 - $T_2$ = 4 years Substituting the values: $$F_{3,4} = \frac{(0.050 \times 4) - (0.046 \times 3)}{4 - 3}$$ $$F_{3,4} = \frac{0.200 - 0.138}{1} = \frac{0.062}{1} = 0.062 = 6.2\%$$ Therefore, the 1-year forward rate three years from today is **6.2%**. **Answer: A**

Author: LeetQuiz Editorial Team