Which of the Following Equations Is INCORRECT

question 74

Multiple Choice

Which of the following equations is INCORRECT?

• A)x_i =
• B)R_p = Σ_i x_iP_i
• C)R_p = x₁P₁ + x₂P₂ + ... + x_nP_n
• D)E[R_p] = E[Σ_i x_iR_i]

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Definitions:

Future Short Rates

Predicted interest rates for short-term debt securities in the future, based on current market conditions and monetary policy expectations.

Yield to Maturity

The total return anticipated on a bond if held until it matures, considering all interest payments and the repayment of principal.

Forward Rate

An agreed upon rate for a financial transaction that will occur at a future date, used in forward contracts.

Zero-coupon Bond

A debt security that does not pay interest but is traded at a deep discount, rendering profit at maturity when the bond is redeemed for its face value.