Given the Following Zero-Coupon Bond Prices,what Are the Forward Rates

question 9

Multiple Choice

Given the following zero-coupon bond prices,what are the forward rates f(0,0) ,f(0,1) ,f(0,2) ?

• A) 0.0222,0.0217,0.0638
• B) 0.0255,0.03222,0.0566
• C) 0.0638,0.0217,0.0222
• D) 0.0566,0.03222,0.0255
• E) 0.02,0.04,0.06

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Definitions:

Required Reserve Ratio

The percentage of deposits that banks are mandated to keep on hand and not lend out, as regulated by central banking authorities.

Money Supply

The total amount of monetary assets available in an economy at any given time, including cash, coins, and balances held in checking and savings accounts.

Credit Cards

Financial instruments that allow holders to borrow funds to pay for goods and services with the expectation of repaying the loan with interest.

Debit Cards

Plastic payment cards that allow users to make transactions by deducting money directly from their checking account, rather than incurring debt like a credit card.