Forward Interest Rates

question 98

Multiple Choice

Forward interest rates:

• A)accurately predict future spots rates because of the law of one price.
• B)tend not to be good predictors of future spot rates.
• C)tend to be biased downward as predictors of future spot rates when the yield curve is upward sloping.
• D)tend to be biased upward as predictors of future spot rates when the yield curve is downward sloping.

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Definitions:

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