Lending for 3 Months and Borrowing for 6 Months Creates

question 204

Multiple Choice

Lending for 3 months and borrowing for 6 months creates a 3x6 forward-forward deposit. The cost of that deposit is called:

• A) Implicit nominal rate
• B) Implied forward rate
• C) Funding rate
• D) Effective future rate

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Definitions:

Chi-Square

A statistical method employed to assess whether a notable difference exists between the frequencies that are observed and those that are anticipated across one or more categories.

Row Variable

A variable represented by rows in a table or matrix, often used to define or categorize the data horizontally.

Column Variable

A variable represented by columns in a dataset, where each column contains values of the variable for each observation.

Alpha

In statistics, often represents the significance level used in hypothesis testing, indicating the probability of rejecting a true null hypothesis.