Unlocking the Secrets of Forward Rates: A Risk Premium Revelation
When it comes to forward rates, there’s more to the story than meets the eye. According to Professor Robert Jarrow’s seminal work, forward rates encompass a risk premium that surpasses the market’s expectations for the 3-month forward rate. But just how significant is this risk premium? In this article, we’ll delve into the details and explore the implications for investors.
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Note: The author has no financial stake in any of the companies mentioned and is not receiving compensation for this article. The views expressed are solely those of the author and do not reflect the opinions of Seeking Alpha or any other entity.
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