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:

Causation

The action of causing something, indicating a relationship between two events where one is the effect of the other.

Correlation Coefficients

A metric showing how much two or more variables change in relation to one another.

Predictions

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