1. Warren owns a zero coupon bond, with FV $1,000, and remaining maturity of 3 years. Warren wants to sell the bond by next year. The probability distribution of next years interest rate is as follows -

Maturity	FV	Pr.	Expected Yield	Price	Prob*Price	Prob*(Price - Expected Price)2
3	$1,000	0.2	0.05
3	$1,000	0.2	0.058
3	$1,000	0.3	0.065
3	$1,000	0.25	0.0687
3	$1,000	0.05	0.07
				Expected price =
					Standard deviation =

Fill up the blank cells of above table and show expected price and standard deviation. (Note that you have to apply PV formula to figure out prices and next years remaining maturity would be 1 year short of current remaining maturity.) (5 points)