The Following Is a List of Prices for Zero Coupon

question 32

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,according to the expectations theory,the expected forward rate in the third year?

• A)7.23
• B)9.37%
• C)9.00%
• D)10.9%
• E)none of the above

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