Suppose That All Investors Expect That Interest Rates for the 4

question 62

Multiple Choice

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

• A) $889.08
• B) $816.58
• C) $772.18
• D) $765.55
• E) None of the options are correct.

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Definitions:

Intolerable Difficulty

Situations or challenges that exceed an individual's capacity to cope or manage effectively.

Coping Mechanisms

Strategies or behaviors individuals employ to manage stress, deal with difficult situations, or mitigate emotional conflicts.

Current Resources

The available assets or capabilities that can be utilized at the present time to achieve objectives or satisfy needs.

Continual Exposure

A therapeutic technique where individuals are repeatedly exposed to feared stimuli, aiming to reduce anxiety and avoidance behaviors over time.