The prices (per $1000 in facevalue) of zero-coupon bonds in the U.S. that prev ailed on 8/31/09 are shown below Price aturity Date 08/31/10 08/31/11 08/31/12 08/31/13 08/31/14 08/31/15 08/31/16 08/31/17 08/31/18 08/31/19 08/3 1 /20 $996.81 $982.24 958.01 $327.48 890.76 $852.27 $813.09 $783.30 $751.84 $716.50 684.95 Questions: 1 For each maturity date, calculate the effective annualized discount rate that is consistent with the price of the zero-coupon bond that matures on that date. Since a zero coupon bond simply makes a single payment of its face value (n this case $1000) on its maturity date, the effective annualized discount rate that is consistent with the price in the market is the rate r that makes the present value of $1000 discounted by the number of years to maturity equal to that price. For example, for the zero-coupon bond that matures on 8/31/20 (i.e., 11 years after 831/09), the effective annualized discount rate is r such that $1000/(1+111 = $684.95. To solve for r, note that $1000/(1+111 = $684.95 implies that 1000/$684.951($1000/$684.95) (1/11)>r- (61000/6684.95) (1/11) 1035 0 9 2 2 8 1+r