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YouTube T3-11: Forward rates are implied by zero rates

Nicole Seaman

Director of FRM Operations
Staff member
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Forward rates link two zero (aka, spot) rates by ensuring your expected return is the same between two choices: (1) invest at the longer-term spot rate versus (2) invest at the shorter-term spot rate and "roll over" into the implied forward rate. This is an implied forward rate that ignores other factors such as liquidity preference.

David's XLS is here: https://trtl.bz/2HMQkUU

 
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