A Forward Rate Prevailing from Period Three Through to Period

question 72

Multiple Choice

A forward rate prevailing from period three through to period four can be:

• A) readily observed in the market place.
• B) extracted from high coupon bonds.
• C) extracted from spot rates with 2 and 3 year maturities.
• D) extracted from spot rates with 3 and 4 years to maturity.

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Definitions:

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its current assets relative to its current liabilities.

Numerator

The top number in a fraction or ratio that represents the part of the whole being considered.

Denominator

In mathematics, the denominator is the bottom part of a fraction that indicates how many equal parts the whole is divided into.

Working Capital Ratio

A liquidity ratio that measures a company's ability to pay off its current liabilities with its current assets.