Answer:
no option is correct, since the market value of the bond is $866.32
if the bond matured in 2 years instead of 3, then option B. $911.37 would be correct = $1,000 / [(1.046)x(1.052)] = $911.366 = $911.37
Explanation:
in order to determine the market value of the bond we need to determine the present value of its face value:
market value = PV = future value / [(1 + i₁) x (1 + i₂) x (1 + i₃)]
future value = $1,000
[(1 + i₁) x (1 + i₂) x (1 + i₃)] = [(1 + 4.6%) x (1 + 4.9%) x (1 + 5.2%)] = 1.154311
PV = $1,000 / 1.154311 = $866.32
