Which of the Following Equations Is INCORRECT

question 21

Multiple Choice

Which of the following equations is INCORRECT?

• A)Expected future spot interest rate = forward interest rate + risk premium
• B)(1 + f₁)× (1 + f₂)× (1 + f₃)× ...× (1 + f_n)= (1 + YTM_n)ⁿ
• C)f_n = - 1
• D)(1 + YTM_n)ⁿ = (1 + YTM_{n - 1})^{n - 1}(1 + f_n)

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Definitions:

Regression Equation

An equation that describes the line of best fit through a dataset, used to predict the outcome variable.

Regression Line

A line of best fit through a dataset, used to predict the value of a dependent variable based on the value of an independent variable.

Standard Error

An estimate of the standard deviation of a sampling distribution, often used in inferential statistics.

Regression Line

A straight line that describes how a dependent variable y changes as an independent variable x changes.