The Annualized Yield on a Three-Year Security Is 13 Percent;

question 74

Multiple Choice

The annualized yield on a three-year security is 13 percent; the annualized two-year interest rate is 12 percent, while the one-year interest rate is 9 percent. The forward rate one year ahead is ____ percent.

• A)2.8
• B)115
• C)103
• D)15.1

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Definitions:

Delegation

The act of assigning responsibility or authority from one person to another.

Donee Beneficiary

A third party who benefits from a contract made between two other parties, specifically where the intent is to gift a benefit or rights under the contract to the third party.

Promisee

The person to whom a promise is made or a commitment is given.

Promisor

An individual or entity that makes a promise or agreement to perform a specified act or service in a contract.