BELOW IS A CHART SHOWING THE TERM STRUCTURE OF RISK-FREE SPOT RATE...

14.

Below is a chart showing the term structure of risk-free spot rates:

Which of the following charts presents the correct derived forward rate curve?

a.

b.

c.

d.

Correct Answer: d

Rationale:

The forward curve will be above the spot curve when the spot curve is rising. The forward curve will also

2015 Financial Risk Manager (FRM®) Practice Exam