YIELD CURVE FOR ZERO COUPON BONDS RATED AA

Multiple Choice

YIELD CURVE FOR ZERO COUPON BONDS RATED AA

Assume that there are no liquidity premiums.
You just bought a 15-year maturity Xerox corporate bond rated AA with a 0 percent coupon. You expect to sell the bond in eight years. Find the expected interest rate at the time of sale (watch out for rounding error) .

A) 13.92 percent
B) 11.00 percent
C) 8.85 percent
D) 12.49 percent
E) 12.80 percent