- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 29. The Arbitrage-Free Valuation Framework
- Subject 2. The Basics of Creating a Binomial Interest Rate Tree
CFA Practice Question
From par rates we can generate spot rates and implied forward rates. If we discount each cash flow with the appropriate discount rate for each period, which rates will produce the highest value?
B. spot rates
C. implied forward rates
A. par rates
B. spot rates
C. implied forward rates
Correct Answer: None of them
The computed values will be the same.
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