s1- 10% s2 - 11% s3- 12% base on this data, the 2- year forward rate on eyear from now is closest to?
Solve for x (I’m too lazy): 1.10*x^2 = 1.12^3
grrrrrrrrrrrr how did u know that!
i thought the forumla is: (1 + 1f2) = (1+s1) + (1 + S2) ^2
The answer is [(1.12)^3 / (1.1)] ^ (1/2) = 1.13 So 2f1 = 13%.
Approximately (12x3 - 10)/2 = 13 8)