Use the Table for the Question(s) Below -The Yield to Maturity for the Three-Year Zero-Coupon Bond Is

question 39

Multiple Choice

Use the table for the question(s) below.
The following table summarises prices of various default-free zero-coupon bonds (expressed as a percentage of face value) :
$\begin{array} { l c c c c c } \hline \text { Maturity (years) } & \mathbf { 1 } & \mathbf { 2 } & \mathbf { 3 } & \mathbf { 4 } & \mathbf { 5 } \\\hline \text { Price (per } \$ 100 \text { face value) } & 94.52 & 89.68 & 85.40 & 81.65 & 78.35 \\\hline\end{array}$
-The yield to maturity for the three-year zero-coupon bond is closest to?

• A) 5.4%
• B) 6.0%
• C) 5.6%
• D) 5.8%

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