Observing the Following Term Structure; a US Treasury Bond Maturing

question 65

Multiple Choice

Observing the following term structure; a US treasury bond maturing in 1 year has a yield of 3% while US Treasury bond maturing in 2 years has a yield of 7%; what is the expected 1 year rate,1 year from now?

• A) 10.16%
• B) 11.00%
• C) 11.16%
• D) 11.23%

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Definitions:

Null Hypothesis

A hypothesis in statistics that proposes no significant difference or effect, serving as the default assumption to be tested.

Alternative Hypothesis

The Alternative Hypothesis is the hypothesis that there is a significant difference or effect, opposed to the null hypothesis in statistical testing.

Inferential Statistics

A branch of statistics that allows for making predictions or inferences about a population based on a sample of data.

Mutually Exclusive

Events that cannot occur simultaneously, indicating that the happening of one precludes the occurrence of the other.