The Following Represents Two Yield Curves -What Is the Cumulative Mortality Rate of the A-Rated and r

question 86

Multiple Choice

The following represents two yield curves.
$\begin{array} { | l r r | } \hline \text { Maturity } & \text { Pure Discount Treasury Yields } & \text { B-rated Carparate Band } \\\hline & & \text { Yields (Pure Discaun Bonds) } \\1 \text { year } & 3 \text { percent } & 6\text { percent }\\2 \text { year } & 6 \text { percent }& 10 \text { percent } \\20 \text { year } & 12 \text { percent }& 17 \text { percent } \\\hline\end{array}$
-What is the cumulative mortality rate of the A-rated and B-rated loans for year 2?

• A)1.0 percent and 2.24 percent.
• B)0.5 percent and 1.24 percent.
• C)1.0 percent and 1.74 percent.
• D)0.5 percent and 0.5 percent.

---

Definitions:

New Reserves

Resources or assets that have been newly discovered or identified, often referring to natural resources like oil, gas, or minerals that can be economically extracted.

Reserve Requirement Ratio

The fraction of deposits that banks must hold in reserve and not lend out, as mandated by the central bank.

Checkable Deposits

Bank account balances that can be withdrawn on demand using checks or electronic payment methods without any advance notice.

Excess Reserves

The amount of reserves that a bank holds in excess of the reserve requirements set by a central bank.