The Annualized Yield on a Two-Year Security Is Below the Annualized

question 10

Multiple Choice

The annualized yield on a two-year security is below the annualized one-year interest rate. The one-year forward rate as of one year ahead is ______________.

• A)zero
• B)negative
• C)positive, but below the annualized one-year interest rate
• D)None of these are correct

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Definitions:

Measurement Precision

The consistency and repeatability of a measurement, not necessarily accurate but consistent.

Ordinal Level

A measurement scale that categorizes data into ordered categories where the order of the values is significant, but the differences between the values are not quantitatively meaningful.

Ratio Level

A scale of measurement where there is a true zero point, allowing for the comparison of absolute magnitudes and the calculation of ratios.

Measurement Precision

The degree to which repeated measurements under unchanged conditions show the same results.