Calculate the Price at the Beginning of Year 1 of Rate

question 43

Multiple Choice

$\begin{array}{cc}\text { Year } & \text { 1 Year Forward Rate } \\1 & 4.5\% \\2 & 5.2\% \\3 & 5.9\% \\4 & 6.3\% \\5 & 6.8 \% \\6 & 7.0\%\end{array}$
Calculate the price at the beginning of year 1 of a 10% annual coupon bond with face value $1,000 and 5 years to maturity.

• A) $1,195
• B) $1,181
• C) $1,175
• D) $1,162
• E) $1,151

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Definitions:

Independent Samples

Two or more groups of data that are not related or influenced by the same variables.

Critical Value

The threshold value that the test statistic must exceed in order for the null hypothesis to be rejected in hypothesis testing.

F-Table

A table used in statistics that displays the critical values of the F-distribution, which is utilized in analysis of variance (ANOVA) and other tests that compare variances.

Stratum Corneum

The outermost layer of the epidermis, consisting of dead keratinocytes, that provides a barrier against environmental damage.