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Explanation:

The 4-year zero-coupon interest rate is calculated by making $R_2$ the subject of the formula in the forward rate formula as follows:

$R_2 = \frac{F(T_2 - T_1) + R_1 T_1}{T_2}$

$= \frac{0.025(4 - 2) + 0.055 \times 2}{4} = 0.04 = 4\%$

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Q.4916 Suppose that the continuously compounded forward rate for the period between year 2 and year 4 is 2.5%. Suppose further that the continuously compounded interest rate of the two-year zero-coupon is 5.5%. What is the continuously compounded 4-year zero-coupon interest rate? | Financial Risk Manager Part 1 Quiz - LeetQuiz