If forecasted ending yield < forward rate --> expected return > one period rate.
If forecasted ending yield > forward rate --> expected return < one period rate.
Can someone explain this?
If forecasted ending yield < forward rate --> expected return > one period rate.
If forecasted ending yield > forward rate --> expected return < one period rate.
Can someone explain this?
Lower forecasted yield means higher forecasted price.
I’ll leave the rest to you.