SOA/FM SAMPLE QUESTION #119

119.
The one-year forward rates, deferred t years, are estimated to be:
Year(t) 0 1 2 3 4 Forward Rate 4% 6% 8% 10% 12%
Calculate the spot rate for a zero-coupon bond maturing three years from now.
(A) 4%
(B) 5%
(C) 6%
(D) 7%
(E) 8%