If the One-Year Spot Interest Rate Is 6% and Two-Year

question 18

Multiple Choice

If the one-year spot interest rate is 6% and two-year spot interest rate is 7%, calculate the one-year forward interest rate one year from today (approximately) :

• A) 6%
• B) 7%
• C) 8%
• D) None of the above

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Definitions:

Universal Proposition

A type of categorical proposition that makes a claim about all members of a particular category, e.g., "All S are P".

Venn Diagram

A graphical representation using circles to depict sets and how they interrelate via overlapping and distancing.

Categorical Syllogism

A form of reasoning where a conclusion is drawn from two given or assumed propositions (premises) that share a common or middle term.

Enthymeme

A rhetorical argument that leaves out a premise or conclusion, assuming it to be implicitly understood by the audience.