What is the price today of a two-year default-free security


Question: Assume the zero-coupon yields on default-free securities are as summarized in the following table: Maturity 1 year 2 years 3 years 4 years 5 years Zero-Coupon Yields 4.7% 5.2% 5.5% 5.7% 6.0% What is the price today of a two-year, default-free security with a face value of $1,000 and an annual coupon rate of 7%? Does this bond trade at a discount, at par, or at a premium? Note: Assume annual compounding. What is the price today of a two-year, default-free security with a face value of $1,000 and an annual coupon rate of 7%? The price is $. (Round to the nearest cent.)

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Finance Basics: What is the price today of a two-year default-free security
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