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 of a zero-coupon, four-year, risk-free bond of $100?
A) $85.64
B) $87.99
C) $92.15
D) $96.67

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 of a zero-coupon, four-year, risk-free bond of $100?
A) $85.64 
B) $87.99 
C) $92.15 
D) $96.67

Quizplus · Accepted Answer

B) Price = (Face value) / (1 + YTM)^N; Price = ($100) / (1 + 3.25%)⁴ = $87.99.

Use the Figure for the Question(s) Below