Financial Risk Manager Part 1

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Explanation:

Correct answer: A

The statement in A is the exception because, on an upward-sloping zero curve, the par yield is typically greater than the zero rate for the same maturity, not smaller.

Why the others are true:

B: On an upward-sloping zero curve, longer forward rates exceed shorter zero rates.
C: A two-year semiannual coupon bond provides enough information to bootstrap the zero curve out to 2 years.
D: For a bond selling at a premium, the relationship is indeed: $\text{coupon rate} > \text{current yield} > \text{YTM}$

So the false statement is A.

Explanation:

Correct answer: A

The statement in A is the exception because, on an upward-sloping zero curve, the par yield is typically greater than the zero rate for the same maturity, not smaller.

Why the others are true:

B: On an upward-sloping zero curve, longer forward rates exceed shorter zero rates.
C: A two-year semiannual coupon bond provides enough information to bootstrap the zero curve out to 2 years.
D: For a bond selling at a premium, the relationship is indeed: $\text{coupon rate} > \text{current yield} > \text{YTM}$

So the false statement is A.

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Question-163.1. With respect to interest rates, EACH of the following is necessarily TRUE except for:

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MManit

Last updated: April 18, 2026 at 11:32

If the zero curve is upward-sloping, the zero rate for a particular maturity is greater than the par yield for that maturity; specifically, if $r(t2) > r(t1)$ , then $\text{zero}(t2) > \text{par yield}(t2)$

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If the zero curve is upward-sloping, the forward rate is greater than the zero rate; specifically, if $r(t2) > r(t1)$ , $\text{forward}(t1, t2) > \text{zero}(t2)$

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If we only have the price and coupon rate for a two-year semi-annual coupon bond, we have enough information to construct the zero rate curve up to two years (but not beyond two years)

Let current yield = annual dollar coupon interest / current price of bond. If a bond is selling at a premium, the coupon rate > current yield > yield to maturity