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NEW QUESTION: 1
If the 1-year forward rates for years 1,2,3 and 4 are 2%, 3%, 4% and 5% respectively, what is the zero coupon spot rate for 4 years
A. 3.50%
B. 4%
C. 5%
D. 3.49%
Answer: D
Explanation:
Explanation
The zero coupon spot rate for 4 years can be calculated as = (1.02*1.03*1.04*1.05)