The Current Required Yields on One- and Two-Year Government Bonds

question 64

Multiple Choice

The current required yields on one- and two-year government bonds are i₁ = 12 per cent and i₂ = 13 per cent. What are the market's expectations of the one-year forward rate, f₁ (round to two decimals) ?

• A) 13.50 per cent
• B) 14.00 per cent
• C) 14.50 per cent
• D) 15.00 per cent

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Definitions:

Direct Discrimination Scheme

Practices or policies that intentionally treat individuals unfavorably because of protected characteristics like race, age, or gender.

Advance-Purchase Discounts

Reductions in price offered to customers who pay for goods or services before they are received or required.

Indirect Price Discrimination

A pricing strategy where different prices are charged for the same product or service in different markets or segments, not directly based on consumer characteristics.

No-Name Brand Wok

A wok (a versatile round-bottomed cooking vessel) marketed without a brand name, often implying it is generic or lesser-known.