Current 1-year spot rate = 5.5%|
the 1-year forward rate one year from now: f1 = 7.63%, |
the 1-year forward rate two years from now: f2 = 12.18%|
the 1-year forward rate three years from now: f3 = 15.5%|
Using the annual compounding, the value of a 3-year, zero-coupon, $1,000 par value bond would be :
A. $708
B. $785
C. $852
D. $948
Is it just 1000/(1,0551,07631,1218)=785?
Practice question from kaplan
