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Problem:

A US Government 2-year T-Note has a face value of $1,000 and pays annual coupons of $70. The first coupon is due in one year. What is the correct price for the coupon bond today? Use the term structure of interest rates shown below.

Term Spot Rate
1-year 5.5%
2-years 9.0%

The correct price for the coupon bond today is $______.

Note: Explain all calculation and formulas.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M91148025

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