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:

Analytic Communication

The process of breaking down complex information into simpler parts for clearer understanding and more effective communication.

Cognitive Development

The process by which a person's ability to think, understand, and learn evolves over time.

Cognitive Developmental Stage

A phase in the psychological development of children marked by specific cognitive abilities and milestones.

Relativism

The doctrine that knowledge, truth, and morality exist in relation to culture, society, or historical context, and are not absolute.