4. The following table summarizes prices of various default-free zero-coupon bonds

(expressed as a percentage of face value):

a. Compute the yield to maturity for each bond.

b. Plot the zero-coupon yield curve (for the first five years).

c. Is the yield curve upward sloping, downward sloping, or flat?

Transcribed Image Text:

Maturity (years) 1 2 3 4 5 Price (per $100 face value) $95.51 $91.05 $86.38 $81.65 $76.51