What Forward Rate Is Embedded in a Two Year Zero

question 26

Multiple Choice

What forward rate is embedded in a two year zero coupon bonds with a yield to maturity
Of 6% and a three year zero coupon bond and a yield to maturity of 6.5%? Assume both bonds are currently priced at par.

• A) 5.50%
• B) 6.00%
• C) 6.50%
• D) 7.50%

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