What Is the One-Year Interest Rate One Year from Now

question 77

Multiple Choice

What is the one-year interest rate one year from now if the current one-year interest rate is 2.75% and the two-year interest rate is 3.21%? Assume the rates are effective annual rates.

• A)3.62%
• B)3.67%
• C)3.71%
• D)3.75%
• E)3.88%

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Definitions:

Ounce of Gold

A unit of measure for weighing gold, where one ounce is equal to approximately 28.35 grams.

Ounce of Chocolate

A unit of measure representing the weight of chocolate, commonly used in purchasing or consuming chocolate.

Price-quantity Schedules

Charts or tables that show the relationship between the prices of goods and services and the quantities supplied or demanded at those prices.

Demand

A schedule or curve that shows the various amounts of a product that consumers are willing and able to purchase at each of a series of possible prices during a specified period of time.