$$\begin{array} { l | l }
\underline { Y e a r } & \underline { 1 - Y e a r } \text { Forward Rate } \
\hline 1 & 5 \% \
\hline 2 & 5.5 \% \
\hline 3 & 6.0 \% \
\hline 4 & 6.5 \% \
\hline 5 & 7.0 \% \
\hline
\end{array}$$
-What should the purchase price of a 2-year zero coupon bond be if it is purchased at the beginning of year 2 and has face value of $1,000?
A)$877.54
B)$888.33
C)$883.32
D)$894.21
E)$871.80

Question

$$\begin{array} { l | l } 
\underline { Y e a r } & \underline { 1 - Y e a r } \text { Forward Rate } \
\hline 1 & 5 \% \
\hline 2 & 5.5 \% \
\hline 3 & 6.0 \% \
\hline 4 & 6.5 \% \
\hline 5 & 7.0 \% \
\hline
\end{array}$$
-What should the purchase price of a 2-year zero coupon bond be if it is purchased at the beginning of year 2 and has face value of $1,000?
A)$877.54
B)$888.33
C)$883.32
D)$894.21
E)$871.80

Quizplus · Accepted Answer

The Answer of $$\begin{array} { l | l } 
\underline { Y e a r } & \underline { 1 - Y e a r } \text { Forward Rate } \
\hline 1 & 5 \% \
\hline 2 & 5.5 \% \
\hline 3 & 6.0 \% \
\hline 4 & 6.5 \% \
\hline 5 & 7.0 \% \
\hline
\end{array}$$
-What should the purchase price of a 2-year zero coupon bond be if it is purchased at the beginning of year 2 and has face value of $1,000?
A)$877.54
B)$888.33
C)$883.32
D)$894.21
E)$871.80

-What Should the Purchase Price of a 2-Year Zero Coupon