Question: A 3-year 1000 face value bond, redeemable at 1200, has 5% annual coupons. The annual effective yield rate consistent with the current term structure of

A 3-year 1000 face value bond, redeemable at 1200, has 5% annual coupons. The annual effective yield rate consistent with the current term structure of interest rates is 3.13%. Given that the 1-year spot rate is 6% and the 3-year spot rate is 3%, determine the price of a 1000 face value 2-year zero-coupon bond. Assume the zero-coupon bond is redeemable at par

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