Compute the Spot rate using the following information on Treasury securities Sup

Question

Compute the Spot rate using the following information on Treasury securities

Suppose two years from now you want to borrow money for ten years, how would you compute implied forward rate? (Just write the formula for it)

Period               Maturity           Coupon Rate/YTM       Spot Rate          Price

1                      0.5                   10.00%                                     $100

2                      1.0                   9.50%                                                   $100

3                      1.5                   9.45%                                                   $100

4                      2.0                   9.25%                                                   $100

Explanation / Answer

IMPLIED FORWARD RATE: SPOT RATE (1+ RATE%)N, N= NO. OF YEARS

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