On May 23, 20XX, the Existing or Current (Spot) One-Year

question 81

Multiple Choice

On May 23, 20XX, the existing or current (spot) one-year, two-year, three-year, and four-year zero-coupon Treasury security rates were as follows:
$${ } _ { 1 } R _ { 1 } = 5.25 \% , \quad { } _ { 1 } R _ { 2 } = 5.75 \% , \quad { } _ { 1 } R _ { 3 } = 6.25 \% , \quad { } _ { 1 } R _ { 4 } = 6.45 \%$$ Using the unbiased expectations theory, what is the one-year forward rate on zero-coupon Treasury bonds for year 4 as of May 23, 20XX?

• A)5.925 percent
• B)6.45 percent
• C)7.05 percent
• D)10.32 percent

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