Fixed Income

9. The Term Structure of Interest Rates: Spot, Par, and Forward Curves practice questions

9. The Term Structure of Interest Rates: Spot, Par, and Forward Curves is part of CFA Level I Fixed Income. Fixed Income questions focus on bond cash flows, yield measures, duration, convexity, credit risk, securitization, and curve interpretation. Use this page to review the controlling ideas, then work through 8 questions with answer explanations and common traps.

Review the worked explanations before moving into adaptive practice. The app version can mix this topic with due reviews and weak related concepts.

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What to know

Identify the rule, formula, or decision criterion before reading the answer choices. CFA Level I distractors often use the right vocabulary with the wrong condition.

How to practice

Work each item under time pressure, then compare your reasoning with the step-by-step explanation and key takeaway.

Review signal

Missed questions should become scheduled reviews when the error comes from a concept gap, formula setup, or answer-choice trap.

Very Difficult

Fixed Income

9. The Term Structure of Interest Rates: Spot, Par, and Forward Curves

The 1-year spot rate is 3.00%, and the 2-year annual spot rate is 4.00%. Assuming annual compounding, the 1-year forward rate beginning one year from today is closest to:

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Moderate

Fixed Income

9. The Term Structure of Interest Rates: Spot, Par, and Forward Curves

A 2-year annual-pay bond has a 5.0% coupon and par value of 1,000. The 1-year spot rate is 4.0%, and the 2-year spot rate is 5.0%. The bond's price is closest to:

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Very Difficult

Fixed Income

9. The Term Structure of Interest Rates: Spot, Par, and Forward Curves

The 1-year spot rate is 3.0%, and the 2-year spot rate is 4.0%, both with annual compounding. The 2-year annual par coupon rate for a bond priced at 100 is closest to:

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Easy