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:

Marginal Cost

The expense associated with manufacturing an extra unit of a product.

Marginal Revenue

The additional income received from selling one more unit of a good or service.

Expected Cost

The predicted amount of money that will be spent on a project or activity, taking into account various factors and possible changes.

Revenue Data

Information regarding the income generated by a business or organization from its operations.