medium · FRM Part 1 Financial Markets and Products
A futures trader notices that the 3-year spot rate is 3.0% and the 4-year spot rate is 3.5% (continuously compounded).
What is the one-year forward rate for the fourth year that should be used as a baseline before checking futures prices?
- 3.5%
- 4.25%
- 5.0%
- 0.5%
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