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The 1-year forward (i.e. the 1-year rate in one year) is 4.714%, the 2-year zero bond is 3.5%, and the 1-year zero bond is 2.3%.
The 1-year forward (i.e. the 1-year rate in one year) is 4.714%, the 2-year zero bond is 3.5%, and the 1-year zero bond is 2.3%. In order to entice a 1-year investor to hold the 2-year bond (and then sell it after one year), what should be the price of the 2-year zero bond if the liquidity premium is 2.5% and the par value is $1,000? Multiple Choice $978.36 O $936.24 $956.76 O $983.47 O $911.24
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