Question #30
Reading: Reading 25 The Term Structure and Interest Rate Dynamics
PDF File: Reading 25 The Term Structure and Interest Rate Dynamics.pdf
Page: 11
Status: Incorrect
Correct Answer: A
Your Answer: C
Question
If the spot curve is upward sloping, the forward curve is most likely to be:
Answer Choices:
A. steeper than the spot curve and above the spot curve
B. parallel to the spot curve and below the spot curve
C. parallel to the spot curve and above the spot curve
Explanation
When the spot curve is upward sloping, the forward curve will be lie above the spot curve
and will also be upward sloping with a steeper slope.