What should be the price of a two year zero coupon bond, Financial Management

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What should be the price of a two year zero coupon bond

Suppose a 2 year 5% (annual coupon) bonds are selling at par (that is, for $100 of face value, the price is equal to $100) and 1 year zero coupon bonds has a yield to maturity of 7%.

(a) What are the 1-year and 2-year interest rates, r1 and r2, respectively?

(b) What should be the price of a two year zero coupon bond with a face value of $100?

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Financial Management: What should be the price of a two year zero coupon bond

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Financial Management: What should be the price of a two year zero coupon bond

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