Which of the Following Statements Is False

Which of the following statements is false?

A) In general, the expected future spot interest rate will reflect investor's preferences toward the risk of future interest rate fluctuations.
B) If investors did not care about risk, then they would be indifferent between investing in a two-year bond and investing in a one-year bond and rolling over the money in one-year.
C) When we refer to the one-year forward rate for year 5, we mean the rate available today on a one-year investment that begins four years from today and is repaid five years from today.
D) In general, we can compute the forward rate for year n by comparing an investment in an n-year, zero-coupon bond to an investment in an (n + 1) -year, zero-coupon bond, with the interest rate earned in the nth year being guaranteed through an interest rate forward contract.

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free