The current zero-coupon yield curve for risk-free bonds is as follows: Maturity (years) 1 2 3...

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The current zero-coupon yield curve for risk-free bonds is as follows: Maturity (years) 1 2 3...

The current zero-coupon yield curve for risk-free bonds is as follows:

Maturity (years) 1 2 3 4 5

YTM 5.01 % 5.53 % 5.72 % 5.95 % 6.04 %

What is the risk-free interest rate for a five-year maturity?

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Answer 1

Answer #1

The risk-free interest rate for a five year maturity is equal to yield to maturity of a five year zero coupon bond.

Hence, 5-year rate = 6.04%

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Answer 2

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