Assume That the Annual Interest Rate on 2-Period Loans Is

question 74

Essay

Assume that the annual interest rate on 2-period loans is 10% and the annual interest rate on 3-period loans is 12%.
a. What is the forward rate on loans made in period 2 and repaid in period 3?
b. What is the present value of a security with a cash flow of $300 at the end of period 1 and a cash flow of $400 at the end of period 3?
c. What is the future value (at the end of period 3) of the security in part b?

---

Definitions:

Unobtrusive Measures

Research methods that involve collecting data without interfering with the subjects' natural environment or behavior.

Moderator's Guide

A structured outline used by moderators to facilitate discussion and ensure consistency across focus groups or interviews.

Question List

A pre-determined set of inquiries or items designed to gather information from respondents or participants in a structured manner.