Which of the Following Statements Is False

question 71

Multiple Choice

Which of the following statements is false?

• A) The forward rate for year 1 is the rate on an investment that starts today and is repaid in one year; it is equivalent to an investment in a one-year zero-coupon bond.
• B) The forward rate is only a good predictor of spot interest rates in the future when investors are risk adverse.
• C) We can use the law of one price to calculate the forward rate from the zero-coupon yield curve.
• D) An interest rate forward contract is a contract today that fixes the interest rate for a loan or investment in the future.

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Definitions:

Consumer Behavior

The examination of how individuals, groups, or organizations choose, acquire, consume, and discard products, services, experiences, or concepts to fulfill their needs, and how these actions affect both the consumer and the broader community.

Traditional Market System

An economic system where trade and economic activities are based on customs, history, and time-honored beliefs.

Marginal Utility

A concept in economics that represents the additional satisfaction or utility a consumer gains from consuming one more unit of a good or service.

Budget Allocation

The process of distributing available financial resources among different departments, projects, or sectors within an organization or government.