Suppose That the One-Year and Two-Year Zero-Coupon Rates Are 6

question 13

Multiple Choice

Suppose that the one-year and two-year zero-coupon rates are 6% and 7%,respectively (assume continuous compounding) .After one year,let the one-year zero-coupon rate move down to 4% or up to 9%.What must be the probability of the up move for the rates to be arbitrage-free?

• A)0.20
• B)0.25
• C)0.50
• D)0.60

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Definitions:

Job Identification

The process or state by which an individual aligns their identity or personal sense of self with their professional role or job.

Emotional State

The current condition of a person's feelings or affective experience, which can influence behavior and decision-making.

Job Satisfaction

The level of contentment employees feel towards their jobs, influenced by factors such as work environment, compensation, and job nature.

Job Dissonance

A situation where there is a conflict or lack of harmony between an employee's values, beliefs, or interests and their job demands or organizational culture.