Suppose the current, zero-coupon, yield curve for risk-free bonds is as follows:
|
Maturity? (years)
|
1
|
2
|
3
|
4
|
5
|
|
Yield to Maturity
|
4.51
|
4.84
|
5.00?%
|
5.12?%
|
5.37?%
|
|
|
|
|
|
|
a. What is the price per $100 face value of a 3-year, zero-coupon risk-free? bond?
b. What is the price per $100 face value of a 5-year, zero-coupon, risk-free? bond?
c. What is the risk-free interest rate for a 3-year maturity?
Note: Assume annual compounding.