Question: Interest rates are equal to 6% for every maturity. A 3-year bond with face value $800 offers an annual coupon rate of 8%. A 2-year

Interest rates are equal to 6% for every maturity. A 3-year bond with face value $800 offers an annual coupon rate of 8%. A 2-year bond with an annual coupon $60 sells at par.

What is the price of the 2-year bond?

a.

$600

b.

$750

c.

$1000

d.

$1500

e.

$800

f.

$1200

g.

$500

h.

We cannot tell without knowing the face value

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