Forward rates, Financial Management

Assignment Help:

Now that we have seen how default-free theoretical rate can be extrapolated from the treasury yield curve, let us see how some other additional information, like forward rates, can be extrapolated from the default-free theoretical spot rate.

Examples of forward rates that can be calculated from the default-free theoretical spot rate curve are as follows:

  • 3-month forward rate three months from now.

  • 6-month forward rate six months from now.

  • 1-year forward rate one year from now.

  • 5-year forward rate three years form now.

Forward rates are also known as implicit forward rates because they are implicitly extrapolated from the default-free theoretical spot rate curve.


Related Discussions:- Forward rates

Equity theory, Equity Theor y This theory proposes that indivi...

Equity Theor y This theory proposes that individuals measure their out- comes/input ratio. Equity theory distinguish that inspiration is not the outcome of an absolute

Stock market indicators, Stock Market indicators: Stock indices can be ...

Stock Market indicators: Stock indices can be organized by weighting the sample of stocks. The stock indicators can be of four types: price-weighted average, volume-weighted av

Fm, challenges that the finance manager face in fulfilling the managerial f...

challenges that the finance manager face in fulfilling the managerial function

Management accounting, Management Accounting: Management accounting on ...

Management Accounting: Management accounting on the other hand tends to focus internally. Reports generated through management accounting processes will be used by the organisa

Determine the net present value, The following information pertains to Fair...

The following information pertains to Fairways Driving Range, Inc.: The company is considering operating a new driving range facility in Sanford, FL. In order to do so, they wi

Venture Capital, Difference between venture capital and conventional financ...

Difference between venture capital and conventional financing

Operating cycle, discuss the applicability of operating cycle and any other...

discuss the applicability of operating cycle and any other financial knowledge to poultry business in uganda

Calculating investment statistics and graphing output, Step 1) Opportunity ...

Step 1) Opportunity Set Graph:Combine 2 of your stocks (Ignore the other 2 stocksfor this step only).  Construct an investment opportunity set (the curved set) between the two risk

Example on walters dividend model, Q. Example on Walters dividend model? ...

Q. Example on Walters dividend model? Example: - The following information is obtainable in respect of a firm: Capitalisation Rate (Ke)                     = 10% Earning

Determine the examples of icq and iceq, Examples of ICQ's and ICEQ's I...

Examples of ICQ's and ICEQ's ICQ: "Does an authorised senior person review purchase invoices before payment is made?" ICEQ: "Can payments be made on purchase invoices th

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd