Question

$1,000 par value zero-coupon bonds (ignore liquidity premiums)


Bond Years to Maturity Yield to Maturity
A 1 6.00%
B 2 7.50%
C 3 7.99%
D 4 8.49%
E 5 10.70%

One year from now bond C should sell for ________ (to the nearest dollar).

A) $857

B) $894

C) $835

D) $821

Answer

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