• You own a $1000 zero-coupon bond that has five years of remaining maturity.You plan on selling that bond in one year and believe that the required yield next year will have the following probability distribution:

Probability

Required Yield (%)

0.1

6.60

0.2

6.75

0.4

7.00

0.2

7.20

0.1

7.45

• What is your expected price when you sell the bond?
• What is the standard deviation of the bond price?