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%

---

Definitions:

Dissociative Disorder

A mental health condition characterized by a disconnection between thoughts, identity, consciousness, and memory.

Conscious Awareness

The state of being aware of and able to think about one's own thoughts, feelings, and experiences.

Sense of Identity

Pertains to one's understanding and perception of themselves, including beliefs, characteristics, and values.

Fugue State

A rare psychological state in which a person loses awareness of their identity or other significant autobiographical information and may engage in unexpected travel or wandering.