On January 15 you observe the following spot rates for zero-coupon bonds maturing in 1, 2 ….5 years. (This means that the bonds pay no coupons. Assume the bonds have a face value of $1,000).

Maturity	1 year	2 years	3 years	4 years	5 years
Spot rate (%)	7.3	7.1	6.8	6.4	5.9

What is the current market price of a bond maturing in 5 years?

Select one:

a. $820.89

b. $750.79

c. $780.25

d. $944.29

Answer rating: 100% (QA)

A 1 Face value 2 interst rate 3 time to ... View the full answer