Suppose the Current 7 Year Rate Is 8% and the Current

question 105

Multiple Choice

Suppose the current 7 year rate is 8% and the current 6 year rate is 6%.What is the one year forward rate for six years?

• A) 16.33%
• B) 18.22%
• C) 20.82%
• D) 14.65%
• E) 15.14%

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Definitions:

Marginal Utility

The additional satisfaction or utility that a person receives from consuming one more unit of a good or service.

Utility-Maximizing Rule

An economic principle stating that consumers allocate their income to purchase the combination of goods and services that maximizes their utility.

Consumption Mix

The combination of goods and services consumed by an individual or in an economy, reflecting preferences, income levels, and other factors.

Marginal Utilities

The increased happiness or advantage gained by a consumer from consuming an extra unit of a good or service.