If zero rates (i.e. ,discount rates)are the same for all maturities and remain the same over the next year,the price of a zero-coupon bond that matures ten years from today will:
A)Decrease over the next year
B)Remain the same over the next year
C)Increase over the next year
D)Cannot tell with the given information

Question

Quizplus · Accepted Answer

The price of a zero-coupon bond increases as it approaches maturity if the discount rates remain constant. This is because the present value of its single future cash flow (the face value at maturity) becomes greater as the time to receive that cash flow decreases.

If Zero Rates (I