[Verse 1] Today's bond price holds tomorrow's secret tale Spot rates whisper what the market knows But forward rates unveil what time will bring When future's curtain finally unfolds A one-year bond at five percent today But what will two-year money cost next year? [Chorus] Forward rates unlock the crystal ball Implied rates hidden in the yield curve's call From spots to forwards, do the math and see Future interest carved in today's reality Forward equals future, spots are now Forward rates show tomorrow's vow [Verse 2] Take two bonds with different maturity Their yields contain a puzzle piece The longer bond must compensate somehow For holding risk that won't decrease Subtract the shorter from the longer term And forward rates emerge from this algebra [Chorus] Forward rates unlock the crystal ball Implied rates hidden in the yield curve's call From spots to forwards, do the math and see Future interest carved in today's reality Forward equals future, spots are now Forward rates show tomorrow's vow [Bridge] One plus spot one, times one plus spot two Squared equals one plus forward true Break it down and solve for what you need Forward rate's the missing puzzle piece When curves are steep, forwards climb high When curves are flat, forwards barely fly [Verse 3] Forward curves can twist and turn and bend They show where interest rates may wander Sometimes they spike above today's yields Sometimes they dip and meander These implied forecasts built from bond math Reveal the market's betting path [Chorus] Forward rates unlock the crystal ball Implied rates hidden in the yield curve's call From spots to forwards, do the math and see Future interest carved in today's reality Forward equals future, spots are now Forward rates show tomorrow's vow [Outro] Every bond price tells tomorrow's story Forward rates decode the hidden glory
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