MiniMe7

in this case I would not calc anything

just look at given forward rates
12

MiniMe7

I refreed to Schweser's Lvl I refresher handbook Page 89.

They show the foward rate estimation using spot rates , and they clearly show the compounding taking place.


I do remember hitting the divide in TVM calculations .

I am now confused becuase there was stuff about B.E.Y etc that's totally out of scope now.


But this year ( Lvl II ) I am taking care to do it only for LIBOR , never for spot rates.

In fact if you look at the spot rates in the table above , they are built up entirely by bootstrapping the forward rates , 1 step at a time , using compounding