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All main topics / Finance & Investment / Derivatives / Derivatives
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

Answer: D

The forward rate accentuates trends in the zero curve. The par yield shows the same trends but in a less pronounced way.
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Flashcard info:
Author: CoboCards-User
Main topic: Finance & Investment
Topic: Derivatives
Published: 27.10.2015




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