The Prices of 1,2,3,and 4-Year Zero Coupon Government Bonds Are

question 11

Multiple Choice

The prices of 1,2,3,and 4-year zero coupon government bonds are 95.42,90.36,85.16,and 78.81,respectively.What is the implied 2-year forward rate between years 2 and 4?

• A) 4.8%
• B) 5.2%
• C) 5.5%
• D) 6.4%

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Definitions:

Critical Value(s)

Specific point(s) on a distribution curve that define the threshold for rejecting the null hypothesis in hypothesis testing.

Level Of Significance

A threshold in hypothesis testing below which the null hypothesis is rejected, indicating statistical significance.

P-Value

The probability of obtaining a test statistic at least as extreme as the one observed during a test, assuming the null hypothesis is true.

Rejection Rules

Guidelines used in hypothesis testing that determine the circumstances under which the null hypothesis should be rejected.