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NEW QUESTION: 1
If the zero coupon spot rate for 3 years is 5% and the same rate for 2 years is 4%, what is the forward rate from year 2 to year 3?
A. 2.03%
B. 7.03%
C. 1%
D. 4.5%
Answer: B
Explanation:
Explanation
The forward rate from year 2 to year 3 in this case can be derived as =(1.05