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I have to find nominal and effective forward interest rate for 3M-9M term, knowing that current interest rates are:

  • 3M - 2.05%
  • 6M - 2.04%
  • 9M - 2.03%
  • 12M - 2.02%

For a nominal interest rate I just solve for $r$ the following equation:

$$(1+\frac{2.05\%}{4})(1+\frac{r}{2})=(1+2.03\%\cdot\frac{3}{4})$$

I will have some $r$ (nominal i.r.) but how can I find an effective interest rate? Won't it be the same as nominal?

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closed as off-topic by vanguard2k, SRKX Nov 26 '14 at 9:23

This question appears to be off-topic. The users who voted to close gave this specific reason:

  • "Basic financial questions are off-topic as they are assumed to be common knowledge for those studying or working in the field of quantitative finance." – vanguard2k, SRKX
If this question can be reworded to fit the rules in the help center, please edit the question.

  • $\begingroup$ This is basic financial question and hence is off-topic here, see the faq. $\endgroup$ – SRKX Nov 26 '14 at 9:23
  • $\begingroup$ You will find how to do it on wikipedia $\endgroup$ – SRKX Nov 26 '14 at 9:24

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