forwards {bondAnalyst} | R Documentation |

Calculates Yearly Forward Rates using the given Spot Rates.

```
forwards(spots, yrsFRbegins, yrsFRapplies, t, n)
```

`spots` |
A vector. |

`yrsFRbegins` |
A number. |

`yrsFRapplies` |
A number. |

`t` |
A vector. |

`n` |
A number. |

According to information provided by Frank J. Fabozzi (2008), the method `forwards()`

is developed to calculate Forward Rates using the given Spot Rates. Here, `spots`

is vector of given spot rates, `yrsFRbegins`

is year in which Forward Rate begins (for example, a value of 1 would mean 1 year from now, and value of 2 would means two years from now), `yrsFRapplies`

means number of years for which the Forward Rate Applies (for example, a value for 1 means for 1 year and `yrsFRapplies`

value of 4 means for four years). So, `yrsFRbegins=2`

and `yrsFRapplies=1`

means computing implied Forward Rate of 2 years from now, for 1 year. This is also called as 1 year forward rate 2 years into future. Lastly, `t`

is a vector of number of years ranging from 1 to any specified number of years for which the Spot Rates are available, and `n`

is number of years under consideration.
For understanding the value of output, it is to be noted that in the first example, an output value of 0.1404 means 1 year from now, for 1 year the implied forward rate works out to be 14.04 percent. In the second example, an output value of 0.2124 means 2 years from now for 1 year the implied forward rate works out to be 21.24 percent (this is also called as 1 year forward rate, 2 years into future).In the third example, an output value of 0.2748 means 3 years from now for 1 year the implied forward rate works out to be 27.48 percent (this is also called as 1 year forward rate, 3 years into future).

Input values to five arguments `spots`

,`yrsFRbegins`

,`yrsFRapplies`

, `t`

and `n`

.

MaheshP Kumar, maheshparamjitkumar@gmail.com

Fabozzi, F. J. (2008). Handbook of Finance: Financial Markets and Instruments. John Wiley & Sons.

```
forwards(spots=c(0.10,0.12,0.15,0.18,0.20,0.22,0.24,0.30),yrsFRbegins=1,yrsFRapplies=1,t=c(1:8),n=8)
forwards(spots=c(0.10,0.12,0.15,0.18,0.20,0.22,0.24,0.30),yrsFRbegins=2,yrsFRapplies=1,t=c(1:8),n=8)
forwards(spots=c(0.10,0.12,0.15,0.18,0.20,0.22,0.24,0.30),yrsFRbegins=3,yrsFRapplies=1,t=c(1:8),n=8)
forwards(spots=c(0.10,0.12,0.15,0.18,0.20,0.22,0.24,0.30),yrsFRbegins=4,yrsFRapplies=1,t=c(1:8),n=8)
forwards(spots=c(0.10,0.12,0.15,0.18,0.20,0.22,0.24,0.30),yrsFRbegins=5,yrsFRapplies=1,t=c(1:8),n=8)
forwards(spots=c(0.10,0.12,0.15,0.18,0.20,0.22,0.24,0.30),yrsFRbegins=6,yrsFRapplies=1,t=c(1:8),n=8)
forwards(spots=c(0.10,0.12,0.15,0.18,0.20,0.22,0.24,0.30),yrsFRbegins=1,yrsFRapplies=4,t=c(1:8),n=8)
forwards(spots=c(0.10,0.12,0.15,0.18,0.20,0.22,0.24,0.30),yrsFRbegins=3,yrsFRapplies=4,t=c(1:8),n=8)
forwards(spots=c(0.10,0.12,0.15,0.18,0.20,0.22,0.24,0.30),yrsFRbegins=5,yrsFRapplies=2,t=c(1:8),n=8)
```

[Package *bondAnalyst* version 1.0.1 Index]