Two parts and pertains to the yield curve

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The following question has two parts and pertains to the yield curve.

a. Suppose on February 6, 2007, the following information is available from the Treasury spot curve:

One-year spot rate = 5%

Two-year spot rate = 4.915%

What is the implied forward rate on a one-year zero coupon Treasury one year from now quoted on a bond-equivalent basis and how should this rate be interpreted?

b. What are three ways the yield curve changes or moves? How are these three changes correlated? Explain

Reference no: EM131012707

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