$\begin{array}{cc}\text { Year } & \text { 1-Year Forward Rate } \\1 & 5\% \\2 & 5.5\% \\3 & 6.0\% \\4 & 6.5\% \\5 & 7.0\%\end{array}$

Multiple Choice

$\begin{array}{cc}\text { Year } & \text { 1-Year Forward Rate } \\1 & 5\% \\2 & 5.5\% \\3 & 6.0\% \\4 & 6.5\% \\5 & 7.0\%\end{array}$
What should the purchase price of a 2-year zero-coupon bond be if it is purchased at the beginning of year 2 and has face value of $1,000?

A) $877.54
B) $888.33
C) $883.32
D) $894.21
E) $871.80