Which of the Below Equations Give the Forward Rate (F) $\frac{\left(1+z_{2}\right)^{2}}{\left(1+z_{1}\right)}-1$

question 14

Multiple Choice

Which of the below equations give the forward rate (f) for a six-month security if z₁ is the six-month spot rate and z₂ is the one-year spot rate?

• A) f = \(\frac{\left(1+z_{2}\right)^{2}}{\left(1+z_{1}\right)}-1\)
• B) f = \(\left(1+z_{2}\right)^{2} \times\left(1+z_{1}\right)-1\)
• C) f = \(\frac{\left(1+z_{1}\right)^{2}}{\left(1+z_{2}\right)}-1\)
• D) f = \(\frac{\left(1+z_{2}\right)}{\left(1+z_{1}\right)^{2}}-1\)

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