A company must make a payment of $4700 in 5 years. Two-year zero coupon bonds and 6-year zero coupon bonds are available for investment. These bonds could be purchased in any quantity and the yield rate is 4% effective.

Find the price of the 2-year zero coupon bond in order to achieve full immunization against any change in interest rates.

Possible Answers

A

966

B

969

C

987

D

1025

E

1045