An Investor Considers the Purchase of a 2-Year Bond with a 5

Multiple Choice

An investor considers the purchase of a 2-year bond with a 5% coupon rate, with interest paid annually. Assuming the sequence of spot rates shown below, the price of the bond is Closest to:
$\begin{array} { l c } \hline \text { Time-to-Maturity } & \text { Spot Rates } \\\hline 1 \text { year } & 3 \% \\2 \text { years } & 4 \% \\\hline\end{array}$

A) 101.93.
B) 102.85.
C) 105.81.