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#1

Hello,

I found this question in the GARP Practice Exam, I do not understand the resolution and want to know if anyone can help me.

Below is information on term structure of swap rates:

The 2-year forward swap rate starting in three years is closest to:

A. 3.50%

B. 4.50%

C. 5.52%

D. 6.02%

Answer: C

Explanation: Computing the 2-year forward swap rate starting in three years:

5.52% = [((1.040)^5/(1.030)^3)^(1/2)]-1

Thank you very much

I found this question in the GARP Practice Exam, I do not understand the resolution and want to know if anyone can help me.

Below is information on term structure of swap rates:

The 2-year forward swap rate starting in three years is closest to:

A. 3.50%

B. 4.50%

C. 5.52%

D. 6.02%

Answer: C

Explanation: Computing the 2-year forward swap rate starting in three years:

5.52% = [((1.040)^5/(1.030)^3)^(1/2)]-1

Thank you very much

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