Question: Year 1-Year Forward Rate 1 4.6 2 4.9 3 5.2 4 5.5 5 6.8 What should the purchase price of a 4-year zero-coupon bond be

Year 1-Year Forward Rate
1 4.6
2 4.9
3 5.2
4 5.5
5 6.8

What should the purchase price of a 4-year zero-coupon bond be if it is purchased today and has face value of $1,000?

Multiple Choice

a) $856.02

b) $887.42

c) $879.54

d) $821.15

e) $866.32

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