Suppose That All Investors Expect That Interest Rates for the 4

Multiple Choice

Suppose that all investors expect that interest rates for the 4 years will be as follows: $\begin{array}{lc}\text { Year } & \text { Forward Interest Rate } \\0 & \text { (today) } 3\% \\1 & 4\% \\2 & 5\% \\3 & 6\%\end{array}$ What is the price of 3-year zero-coupon bond with a par value of $1,000?

A) $889.08
B) $816.58
C) $772.18
D) $765.55
E) None of the options are correct.