Multiple Choice
A $100 face value one-year risk-free discount bond is priced at $95. The two-year discount bond is priced at $90. After one year, the two-year bond will take one of three equiprobable prices, spaced $5 apart. The middle value of these possible prices is
A) $90.25
B) $94.75
C) $95.00
D) $100.00
Correct Answer:
Verified
Correct Answer:
Verified
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