A year ago, you purchased a 3-year 5% annual payment treasury coupon bond at $995 (face value $1,000, still holding it today, already cashed in the first coupon). Today, you observe the following treasury spot rates:

1- year 3%

2-year 4%

3- year 5%

If you don’t want to hold it anymore, what’s the fair price (arbitrage-free) to sell it today?

Answer rating: 100% (QA)

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