If the Ytm Curve Is Upward Sloping Then Which of the Following

question 9

Multiple Choice

If the ytm curve is upward sloping then which of the following orderings of yield, zero-coupon rates (zcr) and forward rates (fwr) is most valid?

• A) ytm < zcr < fwr
• B) ytm < fwr < zcr
• C) zcr < fwr < ytm
• D) fwr < zcr < ytm

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Definitions:

Current Account Deficit

A situation where a country's total imports of goods, services, and transfers exceed its total exports, indicating it is spending more abroad than it is earning.

Capital Account Surplus

Occurs when a country has more incoming foreign investments and transfers than outgoing, influencing the nation's balance of payments and potentially affecting its currency value.

Gold Standard

A monetary system where a country's currency or paper money has a value directly linked to gold.

Trade Deficit

A situation occurring when a country's imports exceed its exports, resulting in a negative balance of trade.