5. If spot rates are 3% for one year, 4% for two years, and 5% for three years, the price of a $1,000 face value, 3-year, 5% annual-coupon bond is closest to: A. $1,419.28 B. $1,792.74 C. $1,001.80 Spot rates are the market discount rates for a single payment to be received in the future. The discount rates for zero-coupon bonds are spot rates and financial analysts or practitioners sometimes refer to spot rates as zero-coupon rates or simply zero rates. 6. Portfolio Manager, David, observes a 234,723-year, 6% annual-pay bond that is currently trading at a flat price of $907.47. With an assumption that its face value is $1,000, the current yield of this bond is closest to: A. 4.48% B. 6.61% C. 8.34%