Assume investors are indifferent among security maturities. Today, the annualized 2-year interest rate is 12 percent, and the 1-year interest rate is 7 percent. What is the forward rate (expected 1-year rate in 1 year) according to the pure expectations theory? Question 10 options: 1.17% 2.41% 5.16% 17.23%
Assume investors are indifferent among security maturities. Today, the annualized 2-year interest rate is 12 percent, and the 1-year interest rate is 7 percent. What is the forward rate (expected 1-year rate in 1 year) according to the pure expectations theory? Question 10 options: 1.17% 2.41% 5.16% 17.23%
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Assume investors are indifferent among security maturities. Today, the annualized 2-year interest rate is 12 percent, and the 1-year interest rate is 7 percent. What is the forward rate (expected 1-year rate in 1 year) according to the pure expectations theory?
Question 10 options:
|
|
1.17% |
|
|
2.41% |
|
|
5.16% |
|
|
17.23% |
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