Question: A U.S. government 2 year T-Note has a face value of $1,000 and pays annual coupons of $20. The first coupon is due in one

A U.S. government 2 year T-Note has a face value of $1,000 and pays annual coupons of $20. 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 below.

Term 1 year: Spot rate = 4%

Term 2 years: Spot rate= 6.5%

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