The Prices of a Number of $1,000 (Face Value)zero-Coupon Bonds

question 69

Multiple Choice

The prices of a number of $1,000 (face value) zero-coupon bonds are provided in the Table, below. Compute the yields on the zero coupon bonds. Plot the yield curve. What is the shape of the yield curve? $\begin{array}{|l|l|cc|} \hline \text { Maturity } & \text {Price } & \text { Yield}\\\hline \text { 1 Year } & \$965.35 & \text {k}_1\\\hline \text {2 Year } & \$923.24& \text { k}_2\\ \hline\text {3 Year } & \$885.25& \text {k}_3\\\hline \end{array}$

• A)Upward sloping
• B)Downward sloping
• C)V-shaped
• D)Flat

---

Definitions:

Rigorous Assessment

A thorough and detailed evaluation process to accurately measure or analyze a particular aspect, condition, or set of data.

Quality Upgrade

A quality upgrade involves improving the standard and performance of a product, service, or process, striving for higher efficiency, reliability, and customer satisfaction.