Question

The following table summarizes prices of various​ default-free zero-coupon bonds​ (expressed as a percentage of the face​ value):

Maturity ​(years)	1	2	3	4	5
Price ​(per $100 face​ value)	​$96.09	​$91.72	​$87.08	​$82.23	​$77.19

a. Compute the yield to maturity for each bond.

b. Plot the​ zero-coupon yield curve​ (for the first five​ years).

c. Is the yield curve upward​ sloping, downward​ sloping, or​ flat?

a. Compute the yield to maturity for each bond.

The yield on the​ 1-year bond is

nothing​%.

​ (Round to two decimal​ places.)

Answer 1

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