SOA Exam FM Sample Question 371
Study guide: Exam FM-2
The prices for four 1000 face amount zero-coupon bonds are as follows:
| Price | Term (in years) |
|---|---|
| 943.40 | 1 |
| 747.26 | 5 |
| 558.39 | 10 |
| 311.80 | 20 |
Determine which of the following statements describes the yield curve underlying these prices.
- A) The yield curve is increasing with constant slope.
- B) The yield curve is flat.
- C) The yield curve is inverted with constant slope.
- D) The yield curve is concave upward.
- E) The yield curve is concave downward.
Answer this question and see the worked solution