If zero rates (also known as discount rates)are positive for any maturity,the discount function $d ( t )$ ,which gives the present value of a dollar receivable at time $t$ in the future,
A)Must be between 0 and 1
B)Must be greater than 0 and can be greater than 1
C)Can be a negative number
D)is usually 0.99

Question

Quizplus · Accepted Answer

The discount function $d(t)$ reflects the present value of $1 receivable at time $t$ in the future. If zero rates are positive, it means that the future value is being discounted to present value, which will always result in a number between 0 and 1, but never reaching 0 or exceeding 1, as the value today of a future dollar is less than a dollar.

If Zero Rates (Also Known as Discount Rates)are Positive for Any