Use the Table for the Question(s)below

question 21

Multiple Choice

Use the table for the question(s) below.
Consider the following zero-coupon yields on default-free securities:
-The forward rate for year 2 (the forward rate quoted today for an investment that begins in one year and matures in two years) is closest to:

• A)5.80%.
• B)5.50%.
• C)5.20%.
• D)5.65%.

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Definitions:

Purchase-Money Security Interest

A legal claim that allows a lender to repossess or foreclose on property if the borrower fails to repay a loan used to purchase the property.

Collateral

Assets pledged by a borrower to secure a loan or credit, which can be seized by the lender if the borrower fails to make required payments.

Secures

Generally refers to providing protection or ensuring the enforcement of a legal agreement, often involving financial assets as collateral.

Ordinary Course

Actions and transactions that are considered normal or routine within the scope of a business's operations or an individual's usual undertakings.