Observing the Following Term Structure; a US Treasury Bond Maturing

question 29

Multiple Choice

Observing the following term structure; a US treasury bond maturing in 5 years has a yield of 6% while US Treasury bond maturing in 3 years has a yield of 4%; what is the expected 2 year rate,3 years from now?

• A) 10.00%
• B) 9.07%
• C) 8.86%
• D) 9.00%

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Definitions:

Goodwill

An intangible asset that arises when a company acquires another business for more than the fair value of its net identifiable assets.

U.S. GAAP

Generally Accepted Accounting Principles in the United States, a set of guidelines and standards for financial reporting and accounting practices to ensure consistency and transparency.

IFRS

International Financial Reporting Standards, which are a set of accounting standards developed by the International Accounting Standards Board (IASB) for the preparation of public company financial statements globally.

Noncontrolling Interest

It refers to the ownership in a subsidiary not attributable to the parent company, representing a minority share that does not control the company.