Given the Following Pattern of Forward Rates $$\begin{array} { c c } \text { Year } & \text { Forward Rate } \\1 & 5 \% \\2 & 6 \% \\3 & 6.5 \%\end{array}$$

question 12

Multiple Choice

Given the following pattern of forward rates: $$\begin{array} { c c } \text { Year } & \text { Forward Rate } \\1 & 5 \% \\2 & 6 \% \\3 & 6.5 \%\end{array}$$
If one year from now the term structure of interest rates changes so that it looks exactly the same as it does today,what would be your holding period return if you purchased a 3-year zero coupon bond today and held it for one year?

• A) 6%
• B) 8%
• C) 9%
• D) 7%
• E) none of these

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Definitions:

Social Organization

The structured patterns of relationships and roles that arise in any society, dictating how individuals and groups interact.

Kinship

A network of relatives into which individuals are born and married, and with whom they cooperate based on customarily prescribed rights and obligations.

Jirgas

Traditional assemblies of leaders in some Pashtun and Baloch communities used for decision-making and resolution of disputes.

Tribal Leaders

Individuals who hold a position of authority or leadership within a tribe, often responsible for decision making and governance.