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Use the following table summarizing the prices of various default-free zero-coupon bonds (expressed as a percentage of face value) to answer the following 2 questions:
Use the following table summarizing the prices of various default-free zero-coupon bonds (expressed as a percentage of face value) to answer the following 2 questions:
- The yield to maturity for the two year zero-coupon bond is closest to:
A. 5.5%
B. 6.0%
C. Not enough information
D. 5.8%
E. 5.6%
2. The price of a risk free coupon bond with face value $100, annual coupons, coupon rate of 10%, and maturity 3 years is
A. You don't have enough information to calculate the price of this bond.
B. 85.40
C. 93.40
D. 110.00
E. 112.36
Maturity (years) | 1 | 2 | 3 | 4 | 5 |
Price (per $100 face value) | 94.52 | 89.68 | 85.40 | 81.65 | 78.35 |
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