How to calculate 5 months Forward rate

Jjulpazol12y ago

Hello, If anyone knows how to calculate 5 months forward rate when it is given $/£ Spot rate 1.9156- 1.9210 3 month forward rate 1.9066 – 1.9120 1 year forward rate 1.8901 – 1.8945 Thank you in advance.

John MoffatTutor12y ago#1

You take the 3 month forward rate and add/subtract 2/9 of the difference between the 3 month and 12 month forward rates (to adjust for another 2 months)