Lending for 3 months and borrowing for 6 months creates a 3x6 forward-forward deposit. The cost of that deposit is called:
A) Implicit nominal rate
B) Implied forward rate
C) Funding rate
D) Effective future rate

Question

Quizplus · Accepted Answer

The cost of the 3x6 forward-forward deposit is called the implied forward rate, as it is the rate at which a lender agrees to lend and a borrower agrees to borrow in the future, based on current market conditions. The other options listed are not specifically related to forward-forward deposits.

Lending for 3 Months and Borrowing for 6 Months Creates