Question: Answer is A please show your work Consider a two year coupon bond issued today with a face value of $1,000 and a 6% coupon

Answer is A please show your work

Consider a two year coupon bond issued today with a face value of $1,000 and a 6% coupon rate. Suppose that yields on zero coupon bonds with terms one and two are 6% and 7% respectively. What is your best estimate of the price of the bond next year after the first coupon? A) $981.40 B) $982.45 C) $985.25 D) $992.50 E) $962.25 48

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