Suppose the current zero-coupon yield curve for risk-free bonds is as follows:
Maturity (years) 1 2 3 4 5
YTM 5.00 5.50 5.75 5.95 6.05
a)What is the price per$100 face value of a two year,zero-coupon,risk-free bond?
b) What is the price per $100 face value of a four year,zero coupon,risk free bond?
c) What is the risk-free interest for a five year maturity?
The price per face value of two year zero coupons and risk free bonds are examined.