Suppose the 8-year spot interest rate is 8 percent and the 4-year spot rate is 7 percent. The forecasted 2-year rate four years from now is 6.25 percent. What is the implied forward rate on a 2-year bond originating 6 years from now? {HINT: Under the expectations hypothesis, in equilibrium an investor with an 8-year holding period will be indifferent between investing in an 8-year bond or a combination of securities over the same period.}

11.84%

Explanation:

8-year spot interest rate is 8 percent

4-year spot rate is 7 percent

Forecasted 2-year rate

(1.08)^8 =(1.07)^4 ×(1.0625)^2(1 + t+5f2)^2

(1+t+5f2)^2=(1.08)^8 /(1.07)^4 ×(1.0625)^2

=1.8509/1.3107×1.1289

=(1.8509/1.4796)^1/2

=(1.2509^1/2)-1

t+5f2=1.1184-1

=0.1184 ×100

=11.84%

the correct answer would be b, when, queen, calder hall and london.

explanation:

we always capitalize words when a paragraph or sentence is starting, when an important name is used, when a place is being written, or simply when a noun is used, etc. so in this sentence, sentence is starting from 'when', so it will be written in capital letters. secondly, queen is considered to be an important person, so it will also be written in capital letter. next, the name of the town is mentioned, i-e calder hall, which will also be written in capital letters. in the last,   city name is being used, 'london', which will also be written in capital letters. so option b is the most appropriate one.