Assume that the Pure Expectations Theory of the term structure applies. Also assume that you observe the annual yield on a 5-year, zero-coupon Treasury security to be 7.0% (you will pay $7,129.86 for the bond and it will mature five years later at a value of $10,000). If you expect one- year spot rates over the next four years to be 6.0%, 7.0%, 6.5%, and 8.0%, then, to the nearest whole dollar, how much should you expect to pay for a zero coupon Treasury security at the beginning of the fifth year if the security will mature for $10,000 at the end of the fifth year? O $9,425 O $9,501 O $9,384 $9,301 O $9,478

Assume that the Pure Expectations Theory of the term structure applies. Also assume that you observe the annual yield on a 5-year, zero-coupon Treasury security to be 7.0% (you will pay $7,129.86 for the bond and it will mature five years later at a value of $10,000 ). If you expect oneyear spot rates over the next four years to be 6.0%,7.0%,6.5%, and 8.0%, then, to the nearest whole dollar, how much should you expect to pay for a zero coupon Treasury security at the beginning of the fifth year if the security will mature for $10,000 at the end of the fifth year? $9,425 $9,501 $9,384 $9,301 $9,478