Explanation:

The forward rate can be calculated from

\left(1 + \frac{0.0294}{2}\right)^4 = \left(1 + \frac{0.0253}{2}\right)^3 \times \left(1 + \frac{f}{2}\right)^1.

Solving for $f$ gives 0.0418, or 4.18%.

(Book 4, Module 56.2, LO 56.c)

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**Question 99** A bond trader has derived the following spot rate curve and forward rates from the prices of Treasury STRIPS: | Maturity (Years) | Spot Rate | Forward Rate | |------------------|-----------|--------------| | 0.5 | 1.50% | 1.50% | | 1.0 | 2.15% | 2.80% | | 1.5 | 2.53% | 3.29% | | 2.0 | 2.94% | ? | Using the information in the table, the 6-month forward rate on an investment that matures in 2.0 years is closest to: | Financial Risk Manager Part 1 Quiz - LeetQuiz

Question 99

A bond trader has derived the following spot rate curve and forward rates from the prices of Treasury STRIPS:

Maturity (Years) Spot Rate Forward Rate
0.5 1.50% 1.50%
1.0 2.15% 2.80%
1.5 2.53% 3.29%
2.0 2.94% ?

Using the information in the table, the 6-month forward rate on an investment that matures in 2.0 years is closest to:

Maturity (Years)	Spot Rate	Forward Rate
0.5	1.50%	1.50%
1.0	2.15%	2.80%
1.5	2.53%	3.29%
2.0	2.94%	?

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RRohit

Last updated: June 26, 2026 at 17:00

3.40%.

3.70%.

3.78%.

4.18%.

Financial Risk Manager Part 1

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