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: $$\begin{array} { l | l | } \hline \text { Year } & \text { Forward Interest Rate } \\\hline 0 & \text { (today) } 3 \% \\\hline 1 & 4 \% \\\hline 2 & 5 \% \\\hline 3 & 6 \% \\\hline\end{array}$$
-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 above