Current 1-yr interest rate is 12%. Forward rate during 2ndyear is 9% and is expected to rise by 0.5% each of the next 3 years. Calculate YTM for 2-yr, 3-yr, and 4-yr bond. Draw the yield curve and explain its shape using appropriate theory of term structure.
Already registered? Login
Not Account? Sign up
Enter your email address to reset your password
Back to Login? Click here