One-, Two-, and Three-Year Maturity, Default-Free, Zero-Coupon Bonds Have Yields

question 45

Multiple Choice

One-, two-, and three-year maturity, default-free, zero-coupon bonds have yields to maturity of 7%, 8%, and 9%, respectively. What is the implied 1-year forward rate 1 year from today?

• A) 2.07%
• B) 8.03%
• C) 9.01%
• D) 11.12%

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Definitions:

Facial Feedback Hypothesis

The idea that facial expressions can influence emotional experiences, such as smiling leading to feeling happier.

James-Lange Theory

A concept suggesting that emotions arise following physiological responses to occurrences.

Affect Emotion

The experience of feeling or emotion, which can influence perceptions, judgments, and behaviors.

Facial Feedback Hypothesis

The theory that suggests the movement and expressions of our face can influence our emotions.