The Main Difference Between the "Short-Form" and "Forward" Methods of Pricing

question 33

Multiple Choice

The main difference between the "short-form" and "forward" methods of pricing a floating-rate note is:

• A) The short-form method gives lower prices than the forward method.
• B) The short-form method gives higher prices than the forward method.
• C) The short-form method does not require knowledge of the entire forward term structure of interest rates.
• D) The short-form method does not use the entire forward term structure of interest rates and hence results in less accurate prices.

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