3 All these rates are in BEY The 2year spot rate is 3 The 2y

3. All these rates are in BEY. The 2-year spot rate is 3%. The 2-years forward rate, 2 year from now, is 6% (ie. the annual rate from the end of year 2 to the end of year 4). The 4-year spot rate is: a) 4.484% b) 4.489%. c) 4.494% d) 4.499%. e) None of the above. .

The four year spot rate = (1.03*1.06)²^*1/4 - 1

The four year spot rate = 4.489 %