Forward Rate Yield Curve

CFA Level II Fixed Income
#1

I understand the spot rate curve and the theory behind deriving forward rates from spot rates using the Forward Rate Model. My question is simply, what are the plots on the forward yield curve telling us?

E.g. is the rate corresponding to the point t=2 on a forward rate curve telling us the 1-year forward rate starting at t=2? Or is it the forward rate from t=2 to the final maturity plotted on the yield curve? Or is it the forward rate for some other time frame? The curriculum doesn’t really explain this simple point.

Thanks!

#2

It’s the 1-year forward rate that discounts a payment at time t = 2 back to time t = 1.

#3

Thank you!

#4

My pleasure.