Financial Risk Manager Part 1

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Answer: Chart D

The forward curve will be above the spot curve when the spot curve is rising. The forward curve will also cross the spot curve when the spot curve reaches its maximum (or extreme) value. The forward curve will be below the spot curve when the spot curve is declining. The only chart that reflects these three conditions is choice D.

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Answer: Chart D

Author: LeetQuiz Editorial Team

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54. Below is a chart showing the term structure of risk-free spot rates:

Which of the following charts presents the correctly derived forward rate curve?

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Chart A

Chart B

Chart C

Chart D

Financial Risk Manager Part 1

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54. Below is a chart showing the term structure of risk-free spot rates: Which of the following charts presents the correctly derived forward rate curve?

54. Below is a chart showing the term structure of risk-free spot rates:

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54. Below is a chart showing the term structure of risk-free spot rates:

Which of the following charts presents the correctly derived forward rate curve?