Assume That the Current Yield on One-Year Securities Is 6

question 8

Multiple Choice

Assume that the current yield on one-year securities is 6 percent, and that the yield on a two-year security is 7 percent. If the liquidity premium on a two-year security is 0.4 percent, then the one-year forward rate is

• A)8.0 percent.
• B)7.6 percent.
• C)3.0 percent.
• D)7.0 percent.

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Definitions:

Right Kidney

The kidney located on the right side of the body, responsible for filtering blood and producing urine.

Renal Pelvis

The central part of the kidney where urine collects before moving into the ureter.

Prophylactic Surgery

Surgery carried out to prevent the occurrence of disease or severe condition, rather than to cure it.

Malignant Neoplasm

A cancerous tumor that can invade and destroy nearby tissue and has the potential to spread to other parts of the body.