What Is the One Year Interest Rate One Year from Now

question 89

Multiple Choice

What is the one year interest rate one year from now if the current one-year interest rate is 2.55 percent and the two-year interest rate is 3.15 percent? Assume the rates are effective annual rates.

• A) 3.62 percent
• B) 3.67 percent
• C) 3.71 percent
• D) 3.75 percent
• E) 3.88 percent

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Definitions:

Reactor

A device used in chemical or nuclear processes to contain and control reactions safely.

Effect Uncertainty

The unpredictability regarding the potential outcomes or impacts of a decision or action.

Response Uncertainty

The inability to predict the outcomes of decisions or actions due to unpredictable external factors or incomplete information.

Environmental Uncertainty

The lack of predictability in the surrounding environment that impacts an organization's decision-making capabilities.