CFA Practice Question

There are 147 practice questions for this study session.

CFA Practice Question

The expectations hypothesis states that the forward interest rate is the:
A. Expected future spot rate.
B. Always greater than the spot rate.
C. Yield to maturity.
Explanation: The forward rate is an unbiased estimate of the future spot rate. There is no risk premium.

User Contributed Comments 1

User Comment
StanleyMo spot rate - The yield to maturity of a zero-coupon bond, usually a Treasury bond, which is used as a benchmark for other bond yields and valuations. Because a zero-coupon bond has no coupon payments, there is no reinvestment risk and, therefore, the precise yield to maturity of the bond can be known
You need to log in first to add your comment.