Solved: Calculate the six-month forward rate, Finance Basics

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Calculate the six-month forward rate

Problem:

Calculate the 1.5-year theoretical spot rate if the 6-month spot rate is 1.75 percent and the 1-year spot rate is 1.95 percent. The 1.5-year note has a coupon of 3 percent and is selling for $101.3518. (Quotes are in decimals, not 32nds.)

Then based on the data and your calculations, calculate the six-month forward rate 1.0 year from now.

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Finance Basics: Calculate the six-month forward rate

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