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I am strugglling in understanding
4. The forward rates are future spot rates. So, the 2-year spot rate is the rate you get for two years, compounded for 2 years that is. The 1-year forward rate, 1 year from now, is the spot rate on a 1-year bond a year later ....(note the difference).
Could you please expand this ....(note the difference).
Thanks |
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