Question: Year - 1 Year Forward Rate 1 5.8 % 2 6.4 % 3 7.1 % 4 7.3 % 5 7.4 % What should the purchase

Year - 1 Year Forward Rate 1 5.8 % 2 6.4 % 3 7.1 % 4 7.3 % 5 7.4 %

What should the purchase price of a 2-year zero-coupon bond be if it is purchased at the beginning of year 2 and has face value of $1,000? A) $877.54 B) $893.36 C) $888.33 D) $871.80 E) $883.32

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