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    Price per Face Value of Two Year Zero Coupon, Risk Free Bond

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    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?

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    Solution Summary

    The price per face value of two year zero coupons and risk free bonds are examined.

    $2.19

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