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