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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:

  1. 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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