One,two and Three Year Maturity,default-Free,zero-Coupon Bonds Have Yields-To-Maturity of 7%,8

question 36

Multiple Choice

One,two and three year maturity,default-free,zero-coupon bonds have yields-to-maturity of 7%,8% and 9% respectively.What is the implied one-year forward rate,one year from today?

• A) 2.0%
• B) 8.0%
• C) 9.0%
• D) 11.1%

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Definitions:

Industrial Regulation

Involves government policies and rules aimed at regulating the activities and standards of specific industries to protect public interest.

Average Total Cost

The total cost of production divided by the quantity produced, representing the cost per unit of output.

Price-fixing

An illegal agreement among competitors to set prices at a certain level, rather than allowing them to be determined by free market forces.

Art Auction Houses

Organizations that facilitate the buying and selling of art pieces through an auction system, often dealing with high-value items.