FRM-FMP

anbu.edu
Finance Junkie
Posts: 205
Joined: Mon Feb 04, 2013 3:35 pm

FRM-FMP

Postby anbu.edu » Wed Mar 27, 2013 12:58 am

If 1-year rates are 5 percent, 1-year rates one year from now are expected to be 5.75 percent, and 1-year rates two years from now are expected to be 6.25 percent, then the unbiased expectations theory of interest rates would indicate current 3-year rates should be closest to:

A) 8.75%.
B) 5.29%.
C) 6.37%.
D) 5.67%.

content.pristine
Finance Junkie
Posts: 356
Joined: Wed Apr 11, 2012 11:26 am

FRM-FMP

Postby content.pristine » Thu Mar 28, 2013 4:16 pm

Dear Anbu,
From now on, please be specific in your doubts.
1. What is the source of the question?
2. What is the answer?
3. Where exactly are you facing problems in this question?


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