Quiz 1: Fin 819-02

25. If the forward rate of interest from year 1 to year 2 is larger than the 1-year spot rate, what is the 2-year spot rate? A) Smaller than the 1-year spot rate . B) Larger than the 1-year spot rate . C) Can't say without knowing the 3-year spot rate . D) The same as the forward rate from year 1 to year 2. E) None of the above . Answer: B ................
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