Which of the Following Statements Is FALSE

question 86

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:

Systematic Judgment

The process of making decisions or conclusions based on a methodical consideration of evidence, criteria, or predetermined rules.

Potential Employee

An individual who is being considered for employment within an organization, typically during the recruitment and selection process.

Perceiver Expectations

The assumptions or beliefs that an observer holds about a situation or individual that can influence their perception and interpretation.

Pygmalion Effect

The phenomenon where higher expectations lead to an increase in performance.