Assume Oat Forward Prices Over the Next 3 Years Are

question 1

Multiple Choice

Assume oat forward prices over the next 3 years are $2.25,$2.35,and $2.28,respectively.Effective annual interest rates over the same period are 5.2%,5.5%,and 5.8%.What is the ?2-year swap price on a hypothetical "forward swap" that begins at the end of year 1?

• A) $2.14
• B) $2.32
• C) $2.41
• D) $2.53

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Definitions:

Welfare Dependency

A situation where individuals or families rely extensively on government assistance programs for their income over long periods.

Poverty Rate

The percentage of the population living below the national poverty line, which measures the minimum income level required to meet basic living needs.

Lower Three Quintiles

The bottom 60% of the population when divided by income or wealth, often used in analyses of income distribution.

Income

The monetary payment received by an individual or household for labor, investment, or other sources over a specific period.