The Following Is a List of Prices for Zero-Coupon Bonds $\begin{array}{cc}\text { Maturity } & \text { Price } \\\text { (Years) } & \\1 & \$ 925.15 \\2 & 862.57 \\3 & 788.66 \\4 & 711.00\end{array}$

question 54

Multiple Choice

The following is a list of prices for zero-coupon bonds with different maturities and par values of $1,000. $\begin{array}{cc}\text { Maturity } & \text { Price } \\\text { (Years) } & \\1 & \$ 925.15 \\2 & 862.57 \\3 & 788.66 \\4 & 711.00\end{array}$
According to the expectations theory, what is the expected forward rate in the third year?

• A) 7.23%
• B) 9.37%
• C) 9.00%
• D) 10.9%

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Definitions:

Statistical Relationship

The association or connection between two or more variables, which can be determined through statistical analyses.

Negative Correlation

A statistical relationship between two variables where one variable increases as the other decreases.

Confounding Variables

Factors other than the independent variable that might cause changes in the dependent variable, potentially misleading the results of a study.

Original Variables

Fundamental or initial factors or conditions that can influence outcomes in scientific research or statistical analysis.