Actuarial Outpost
Go Back   Actuarial Outpost > Exams - Please Limit Discussion to Exam-Related Topics > SoA/CAS Preliminary Exams > Financial Mathematics
FlashChat Actuarial Discussion Preliminary Exams CAS/SOA Exams Cyberchat Around the World Suggestions

DW Simpson International Actuarial Jobs
Canada  Asia  Australia  Bermuda  Latin America  Europe

Financial Mathematics Old FM Forum

Thread Tools Search this Thread Display Modes
Old 04-14-2018, 01:05 AM
joytoszewing joytoszewing is offline
Join Date: Mar 2018
College: 2nd year Waterloo actsc
Posts: 1
Default FM/2 practice

Can anyone provide the solution for the following question?

The one-year forward rate for year 2 is 4%. The four-year spot rate is 10%. The expected spot rate at the end of year 2 on a zero-coupon bond maturing at the end of year 4 is 7%. Determine the one-year spot rate.
Reply With Quote
Old 04-14-2018, 01:42 AM
Breadmaker's Avatar
Breadmaker Breadmaker is offline
Join Date: May 2009
Studying for CPD - and nuttin' else!
College: Swigmore U
Favorite beer: Guinness
Posts: 3,457

Two choices: invest for a full 4 years, or keep reinvesting for various terms. Either way, you should have the same amount of money at the end of 4 years.
"I'm tryin' to think, but nuthin' happens!"
Reply With Quote

Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

All times are GMT -4. The time now is 04:39 AM.

Powered by vBulletin®
Copyright ©2000 - 2018, Jelsoft Enterprises Ltd.
*PLEASE NOTE: Posts are not checked for accuracy, and do not
represent the views of the Actuarial Outpost or its sponsors.
Page generated in 0.30212 seconds with 11 queries