Use the Table for the Question(s) Below

question 59

Multiple Choice

Use the table for the question(s) below.
Consider the following zero-coupon yields on default-free securities:
-Which of the following statements is correct?

• A) A forward rate for 5-year means that the rate is available today on a one-year investment that begins 2 years from today and is repaid five years from today.
• B) A forward rate for 5-year means that the rate is available today on a one-year investment that begins 3 years from today and is repaid five years from today.
• C) A forward rate for 5-year means that the rate is available today on a one-year investment that begins 5 years from today and is repaid five years from today.
• D) A forward rate for 5-year mean that the rate is available today on a one-year investment that begins 4 years from today and is repaid five years from today.

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