What Should the Purchase Price of a 3-Year Zero-Coupon Bond

question 11

Multiple Choice

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

• A) $887.42
• B) $871.12
• C) $879.54
• D) $856.02
• E) $866.32

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