The Following Is a List of Prices for Zero Coupon

question 50

Multiple Choice

The following is a list of prices for zero coupon bonds with different maturities and par value of $1,000. $$\begin{array} { | l | l | } \hline \text { Maturity (Years) } & \text { Price } \\\hline 1 & \$ 925.16 \\\hline 2 & \$ 862.57 \\\hline 3 & \$ 788.66 \\\hline 4 & \$ 711.00 \\\hline\end{array}$$
What is the price of a 4-year maturity bond with a 10% coupon rate paid annually? (Par value = $1,000)

• A) $742.09
• B) $1,222.09
• C) $1,035.66
• D) $1,141.84
• E) None of these is correct.

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