price today of a​ two-year, default-free security with a face value of $1,000

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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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
6.2​%
6.8​%
7.1​%
7.4​%
7.7​%
 
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
6%​?
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
6%​?
 
The price is
​$______________
​(Round to the nearest​ cent.)
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