Suppose That All Investors Expect That Interest Rates for the 4

question 51

Multiple Choice

Suppose that all investors expect that interest rates for the 4 years will be as follows: $\begin{array}{ll}\text { Year } &\text { Forward Interest Rate }\\ 0 & 4\% \text { (today) } \\1 & 5\% \\2 & 6\%\\3&7\%\end{array}$
What is the price of a 3-year zero-coupon bond with a par value of $1,000?

• A) $896.83
• B) $863.92
• C) $772.18
• D) $765.55
• E) None of the options are correct.

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Definitions:

Lower Limb

Refers to the part of the body extending from the hip to the toes, including the thigh, leg, and foot.

Hip Muscles

A group of muscles around the hip joint that contribute to movement in various directions.

Quadriceps Femoris

A muscle group consisting of four muscles on the front of the thigh that extend the knee.

Innervated

Supplied or stimulated by nerves.