The Current Market Interest Rate for One Year Maturity Bond

question 8

Multiple Choice

The current market interest rate for one year maturity bond is 10%.The forward rate for a one year investment starting in one year from now is 8%.According to the expectations theory of term structure,the current two-year maturity market interest rate is approximately:

• A)9%.
• B)8%.
• C)10%
• D)6%.

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