Which of the Following Statements Is Correct

question 67

Multiple Choice

Which of the following statements is correct?

• A) A forward rate for year 5 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 year 5 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 year 5 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 year 5 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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Definitions:

Payable to Bearer

A designation on a financial instrument (like a check) meaning the person in possession of it can redeem it for its value.

UCC

The Uniform Commercial Code comprises a broad framework of regulations that control commerce transactions within the United States.

Payee

The party in a transaction who receives the payment.

Unconditional Promise

A pledge or assurance without any stipulations, qualifiers, or conditions, guaranteeing certain actions or outcomes.