The following Treasury zero rates are exhibited in the marketplace:
6 months = 1.25%
1 year = 2.35%
1.5 years = 2.58%
2 years = 2.95%
Assuming continuous compounding, the price of a 2-year Treasury bond that pays a 6 percent semiannual coupon is closest to: A. 105.90. B. 105.20. C. 103.42. D. 108.66.
