A One-Year STRIPS Sells at an Interest Rate of 3

question 30

Multiple Choice

A one-year STRIPS sells at an interest rate of 3.20 percent and a two-year STRIPS sells at an interest rate of 3.90 percent.What is the implied one year forward rate? Assume the rates are effective annual rates.

• A) 4.20 percent
• B) 4.30 percent
• C) 4.40 percent
• D) 4.50 percent
• E) 4.60 percent

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Definitions:

Flexible Budget

A budget that adjusts or flexes with changes in the volume or activity level.

Static Planning Budget

A budget based on a fixed level of activity and does not change in response to variations in the actual level of activity.

Activity Variances

The differences between planned or standard costs of activities and the actual costs incurred, useful for management in budgeting and performance evaluation.

Patient-visits

Refers to the total number of times patients see a healthcare provider or visit a healthcare facility for services.