$\begin{array}{cc}\text { Year } & \text { 1-Year Forward Rate } \\1 & 4.6\% \\2 &4.9\% \\3 & 5.2\% \\4 & 5.5\% \\5 &6.8\%\end{array}$

question 39

Multiple Choice

$\begin{array}{cc}\text { Year } & \text { 1-Year Forward Rate } \\1 & 4.6\% \\2 &4.9\% \\3 & 5.2\% \\4 & 5.5\% \\5 &6.8\%\end{array}$
What should the purchase price of a 4-year zero-coupon bond be if it is purchased today and has face value of $1,000?

• A) $887.42
• B) $821.15
• C) $879.54
• D) $856.02
• E) $866.32

---

Definitions:

Laptop Computers

Portable personal computers with a clamshell form factor, suitable for mobile use and equipped with advanced computing capabilities.

Income Effect

The variation in a person's or an economy's earnings and the impact of this variation on the demand for a specific product or service.

Substitution Effect

The change in consumption patterns due to a change in relative prices, leading consumers to substitute one product for another.

Diminishing Marginal Utility

The principle stating that as a person consumes more of a good, the additional satisfaction derived from consuming an additional unit lessens.