Question
Suppose the current, zero-coupon, yield curve for risk-free bonds is as follows: Maturity (years) 1 2 3 4 5 Yield to Maturity 4.24% 4.56% 4.81%
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Suppose the current, zero-coupon, yield curve for risk-free bonds is as follows:
Maturity (years) | 1 | 2 | 3 | 4 | 5 |
Yield to Maturity | 4.24% | 4.56% | 4.81% | 4.94% | 5.26% |
a. What is the price per
$100
face value of a
3-year,
zero-coupon risk-free bond?b. What is the price per
$100
face value of a
4-year,
zero-coupon, risk-free bond?c. What is the risk-free interest rate for a
3-year
maturity?
Note:
Assume annual compounding.a. What is the price per
$100
face value of a
3-year,
zero-coupon risk-free bond?The price is
$nothing.
(Round to the nearest cent.)b. What is the price per
$100
face value of a
4-year,
zero-coupon, risk-free bond?The price is
$nothing.
(Round to the nearest cent.)c. What is the risk-free interest rate for a
3-year
maturity?The risk-free rate is
nothing%.
(Round to two decimal places.)
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