Suppose that the current two-year spot rate is 54 with a, Financial Management

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Suppose that the current two-year spot rate is 54 with a

Suppose that the current two-year spot rate is 5.4%, with a forward rate of 7.7% (one-year spot rate is 3.1%). If forward rates are not realized and instead are higher than expected, would you rather go short or long the 2 year spot today? Prove mathematically.

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Financial Management: Suppose that the current two-year spot rate is 54 with a

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Financial Management: Suppose that the current two-year spot rate is 54 with a

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