Question 1 through Question 4 are based on the information on current spot and forward term structures (assume the corporate debt pays interest annually) in Table 1:

Question 1. Which one of the following is closest to the value of X and Y respectively?

Hint: Based on the table, X denotes the implied forward rate on one-year maturity Treasuries to be delivered in one year, or in other words, the risk-free interest rate in the second year. Y denotes the implied forward rate on one-year BBB corporate debt to be delivered in one year.

Question 1 options:

A)	X = 6.23%, Y = 10.25%

B)	X = 8.25%, Y = 10.25%

C)	X = 8.25%, Y = 12.37%

D)	X = 7.81%, Y = 12.37%

E)	X = 7.81%, Y = 10.25%