why is it that when initiation date increases the distance between the forward and spot rate curve increases?

CFA Level II Fixed Income
#1

Hi,

Also how is it that forward rate is greater than spot rate with the increase in initiation date.

And how is it that YTM is a weighted average of the spot rates

Thanks

#2

I do not understand the first two questions.

As for the third: if you discount one cash flow at 2% and another at 5%, the result is the same as if you discounted both at something between 2% and 5%.

#3

My first question is that when the T* increases for a forward contract then why does the forward rate increase? This question has been asked in a different way in the curriculum Example 6 Q.3 Reading 35. There it is asked that when the spot curve is downward sloping, an increase in the initiation date results in a forward curve:

a. closer to the spot curve

b. greater distaance above the spot curve

c. greater distance below the spot curve.

My second question was related to the first one but never mind. I seem to have forgotten why did I ask it in the first place.

Thanks.