3 yr forward rate?

djjk1

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how do i find the 3 yr fwd rate from spots.

is it 4 yr spot / 2 yr spot OR 4 yr spot / 3 yr spot. i dont have my CFAi text with me an the schweser seems ambiguos.
thx



Edited 1 time(s). Last edit at Thursday, December 4, 2008 at 11:30PM by djjk1.
 
You would need the 4 year spot for sure. Is it a 3 year forward 1 year from now? If so, you would need the 1 year spot as well.
 
its the 1 yr fwd rate 3 yrs from now.
 
isn't it:

(1+S)^4/(1+S)^3 -1 = 1F3

If so you would only need the spot rate for years 3 and 4
 
i thought that was correct. pg 124 of schweser book 5 seemed to imply otherwise but thanks for the clarifaction.
 
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