Forward rates/implied forward rates

boon22 · December 17th, 2007, 2:51 am

What is the formula?Is the formula at Hull's book correct (there is no risk component there)?Is there any difference between Forward rate and Implied forward rates?Thanks

bilbo1408 · December 20th, 2007, 1:58 pm

Implied Forward rates are developed by "bootstrapping" the theoritical spot rate curve. Actual forward rates are what is observed in the market today. You will have to post the formula in Hull's book for me to tell if it is correct, but my assumption is that it will be.