Suppose that all investors expect that interest rates for the 4 years will be as follows: What is the price of 3-year zero-coupon bond with a par value of $1,000
A)$889.08
B)$816.58
C)$772.18
D)$765.55
E)None of the options

Name: Suppose that all investors expect that interest rates for the 4 years will be as follows: What is the price of 3-year zero-coupon bond with a par value of $1,000 A)$889.08 B)$816.58 C)$772.18 D)$765.55 E)None of the options
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Question

Suppose that all investors expect that interest rates for the 4 years will be as follows:  What is the price of 3-year zero-coupon bond with a par value of $1,000
A)$889.08 
B)$816.58 
C)$772.18 
D)$765.55 
E)None of the options

Quizplus · Accepted Answer

$1,000/(1.03)(1.04)(1.05) = $889.08.

Suppose That All Investors Expect That Interest Rates for the 4