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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 4.22% 4.55% 4.69%
Suppose the current, zero-coupon, yield curve for risk-free bonds is as follows:
Maturity (years) | 1 | 2 | 3 | 4 | 5 |
---|---|---|---|---|---|
Yield to Maturity | 4.22% | 4.55% | 4.69% | 5.08% | 5.30% |
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 1-year maturity?
Note: Assume annual compounding.
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