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58

The zero curve is downward sloping. Define X as the 1-year par yield, Y as the 1-year zero rate and Z as the forward rate for the period between 1 and 1.5 year. Which of the following is true?

A.X is less than Y which is less than Z

B.Y is less than X which is less than Z

C.X is less than Z which is less than Y

D.Z is less than Y which is less than X

A.X is less than Y which is less than Z

B.Y is less than X which is less than Z

C.X is less than Z which is less than Y

D.Z is less than Y which is less than X

Answer: D

The forward rate accentuates trends in the zero curve. The par yield shows the same trends but in a less pronounced way.

The forward rate accentuates trends in the zero curve. The par yield shows the same trends but in a less pronounced way.

Flashcard info:

Author: CoboCards-User

Main topic: Finance & Investment

Topic: Derivatives

Published: 27.10.2015