Which of the Following Is NOT Correct Concerning Forward Rates

question 7

Multiple Choice

Which of the following is NOT correct concerning forward rates?

• A) Forward rates link the current spot rate over one holding period to the current spot rate over a longer holding period.
• B) They apply to contracts made now but relating to a period forward in time.
• C) The forward rate, in reality, is the interest rate specified on a one-year loan.
• D) Forward rates involve contracts made now for a loan made one year from now and paid back two years from now.

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Definitions:

Marginal Product

The additional output generated by using one more unit of a particular input, holding other inputs constant.

Inventory

The goods and materials a business holds for the ultimate goal of resale, production, or utilization.

Labor Hours

The total amount of time workers spend working in a given period, typically measured in hours per day, week, or year.

Isoquant

An isoquant is a curve that represents all the combinations of inputs that produce the same level of output in production theory.