I came across this question in chapter 4 of Hull 'Options Futures and other Derivatives'. I have the answer but Im not sure what the explanation is. Could anyone help?(adsbygoogle = window.adsbygoogle || []).push({});

The term structure of interest rates is upward sloping. Put the following in order of magnitude :

a) the 5 year zero rate

b) the yield on a 5 year coupon bearing bond

c) The forward rate corresponding to the period between 4.75 and 5 years in the future

The answer is c > a > b, but why?

**Physics Forums | Science Articles, Homework Help, Discussion**

Join Physics Forums Today!

The friendliest, high quality science and math community on the planet! Everyone who loves science is here!

The friendliest, high quality science and math community on the planet! Everyone who loves science is here!

# Term structure of interest rates

**Physics Forums | Science Articles, Homework Help, Discussion**