Use the figure for the question(s) below.
-The current zero-coupon yield curve for risk-free bonds is shown above. What is the risk-free interest rate on a 4-year maturity?
A) 3.00%
B) 3.15%
C) 3.25%
D) 6.34%

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 risk-free interest rate on a 4-year maturity?
A) 3.00% 
B) 3.15% 
C) 3.25% 
D) 6.34%

Quizplus · Accepted Answer

To find the risk-free interest rate on a 4-year maturity, we need to look at the point where the 4-year maturity intersects with the yield curve. This point is approximately 3.25%, which is the yield on a 4-year risk-free bond. Therefore, the correct answer is (C) 3.25%.

Use the Figure for the Question(s) Below