A 4-year, zero coupon Treasury bond sells at a price of $774.4104. A 3-year, zero coupon Treasury bond sells at a price of $837.2475. Assuming the expectations theory is correct, what does the market believe the price of 1-year, zero coupon bonds will be in 3 years? Do not round your intermediate calculations.
A. $998.94
B. $869.45
C. $971.20
D. $1,156.19
E. $924.95
Answer: E
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