Corporate Finance (FIN 201) Yield Curve, Spot Rates, and Forward Rates Practice Problems
New York University
Corporate Finance (FIN 201) | Practice Problems

Overview
Practice problems on building intuition for the yield curve and calculating spot and forward rates, which show up in fixed-income exam sections.

Key topics
•yield curve interpretation
•spot rate bootstrapping intuition
•forward rate calculation
•discounting cash flows with spot rates

Suggested study tasks
•compute a forward rate from two spot rates
•discount a cash flow using a spot rate
•explain what a steep vs inverted yield curve suggests

Common pitfalls
•mixing up spot rates with forward rates
•using the wrong compounding convention
•discounting all cash flows at the same yield by mistake