AppliedMultiple choice
Reading the curve · Part 2 of 3
The one-year zero rate is 4.0% and the two-year zero rate is 4.5%, both annually compounded. The ten-year yield is 3.5%.
What one-year rate, one year from now, is implied by the one- and two-year zero rates?
- AAbout 5.0%
- B4.25%, the average of the two rates
- C4.5%, the same as the two-year rate
- D0.5%, the difference between the two rates
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