Given the Yield on a 3 Year Zero-Coupon Bond Is

question 3

Multiple Choice

Given the yield on a 3 year zero-coupon bond is 7.2% and forward rates of 6.1% in year 1 and 6.9% in year 2,what must be the forward rate in year 3?

• A) 7.2%
• B) 8.6%
• C) 6.1%
• D) 6.9%
• E) none of these.

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Definitions:

Catastrophism

The theory that Earth has been affected in the past by sudden, short-lived, violent events, possibly worldwide in scope.

Evolution

The process by which different kinds of living organisms are thought to have developed and diversified from earlier forms during the history of the earth.

Biological Sciences

The branch of natural science concerned with the study of life and living organisms, including their structure, function, growth, evolution, distribution, and taxonomy.

Genome

The complete structure sequence of DNA for a species.