At the end of the current year, you observe the following data about Government of Canada pure

Question:

At the end of the current year, you observe the following data about Government of Canada pure discount bonds (zero coupon bonds):

a. What price do you expect bond C to sell for at the end of year 2?
b. The Government of Canada is considering issuing a coupon bond. The bond will pay a 7-percent coupon, paid annually. The face value of the bond will be $1,000. What price would you expect the bond to sell for today?

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...