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    Question

    The rate applicable to an investment lasting for n years when all the returns are realized at the end is called:

    A Zero rate Correct Answer Incorrect Answer
    B Present rate Correct Answer Incorrect Answer
    C Coupon rate Correct Answer Incorrect Answer
    D Repo rate Correct Answer Incorrect Answer
    E Bank rate Correct Answer Incorrect Answer

    Solution

    The rate applicable to an investment for n years when all the returns are earned at the end of the maturity period is called zero rate or forward rate. Forward rates are the rates applicable to future time periods implied by today’s zero rates.

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