The Following Is a List of Prices for Zero-Coupon Bonds

question 36

Multiple Choice

The following is a list of prices for zero-coupon bonds with different maturities and par values of $1,000. $$\begin{array} { c c } \text { Maturity } & \text { Price } \\\text { (Years) } & \\1 & \$ 943.40 \\2 & 881.68 \\3 & 808.88 \\4 & 742.05\end{array}$$ According to the expectations theory, what is the expected forward rate in the third year?

• A) 7.00%
• B) 7.33%
• C) 9.00%
• D) 11.19%
• E) None of the options are correct.

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Actions that are taken to enforce rules, consisting of penalties for noncompliance or incentives for compliance.

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Mores

Strongly held norms or customs considered vital to the functioning of a society, often embodying its moral views and principles.