Spot Rate
The spot rate for a given maturity is the current annualized rate used to discount a single cash flow due at that date; it represents the yield on a theoretical zero-coupon bond maturing at that horizon and is derived from the current yield curve.
Example: If a zero-coupon bond pays $1,000 in five years and the five-year spot rate is 3%, its price today would be approximately 1,000 / (1.03)^5.
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