You Note the Following Yield Curve in the Wall Street

question 76

Multiple Choice

You note the following yield curve in The Wall Street Journal. According to the unbiased expectations hypothesis, what is the one-year forward rate for the period beginning one year from today, ₂f₁?
$$\begin{array}{l}\begin{array} { l l } \text {Maturity }&\text {Yield}\\\text {One day }&2.00\%\\\text {One year }&6.00\\\text {Two years }&7.50\\\text {three years }&9.00\\\end{array}\end{array}$$

• A) 7.6 percent
• B) 8.6 percent
• C) 9.0 percent
• D) 10.2 percent

---

Definitions:

Direct Method

A cash flow statement preparation approach that reports major classes of gross cash receipts and payments.

Cost of Goods Sold

An expense recorded to reflect the cost directly associated with producing the goods sold by a company.

Comparative Balance Sheets

Comparative balance sheets present the financial position of a company at two different points in time, allowing for analysis of changes and trends.

Inventory

The sum of all products and materials possessed by a firm, intended for either reselling or manufacturing.