Use the figure for the question(s)below.
-The current zero-coupon yield curve for risk-free bonds is shown above.What is the price per $100 face value of a four-year,zero-coupon,risk-free bond?
A)$85.64
B)$87.99
C)$92.15
D)$96.67
E)$90.85

Question

Use the figure for the question(s)below. 
-The current zero-coupon yield curve for risk-free bonds is shown above.What is the price per $100 face value of a four-year,zero-coupon,risk-free bond?
A)$85.64 
B)$87.99 
C)$92.15 
D)$96.67 
E)$90.85

Quizplus · Accepted Answer

The price of a zero-coupon bond can be calculated using the formula: Price = Face Value / (1 + yield)^n, where n is the number of years until maturity. Given a four-year maturity, we look for the yield corresponding to a four-year term. Assuming the yield is provided in the question's data (not shown here), we apply the formula. Without the specific yield, we cannot calculate directly, but the correct process involves using the given yield curve for a four-year term to find the appropriate discount rate, then applying it to the $100 face value. Option B is marked as correct based on the assumption that the yield curve data provided leads to this calculation.

Use the Figure for the Question(s)below