Suppose the Current 6 Year Spot Rate Is 8% and the Current

question 8

Multiple Choice

Suppose the current 6 year spot rate is 8% and the current 5 year spot rate is 7%.What is the one year forward rate in five years?

• A) 12.62%
• B) 11.58%
• C) 13.14%
• D) 14.65%
• E) 15.14%

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Definitions:

Labour Costs

The total expense incurred by an employer for the salaries, wages, and benefits of its employees.

Employee Leasing

A practice where businesses hire their workers through a third-party, transferring the administrative responsibility of employees, such as payroll and benefits, to the leasing firm.

Outsourcing

The practice of hiring external companies or individuals to perform tasks, handle operations or provide services that are either difficult to manage or are outside the business's core competencies.

Offshoring

The practice of relocating business processes or services to another country, often to take advantage of lower labor costs or favorable regulatory environments.