I need help here.
Peter will present the hypothetical rates and LIBORs shown in Exhibit 1 (https://ibb.co/cPLShH)to illustrate the result of using an FRA. Current 2x5 FRA price is 3.8%. All rates are annualized. Using the price and predicted LIBOR rates in exhibit 1, which of the following is closest to the predicted value of the FRA at the year end?
When I working on the question to calculate forward rate base on Libor rate, the questions gives me this table. The answer is the first column (in 30 days) to calculate 1X4 forward rate (I assume the first column is the spot libor rate, but why they mention in 30-day?). Also what is the second and afterwards’s columns mean here? Do they represent future libor rate? Thanks.