Question: Using the information provided in the table below, please determine the price at which the U.S. Treasury should issue a five year bond with an

Using the information provided in the table below, please determine the price at which the U.S. Treasury should issue a five year bond with an annual coupon rate of 10% and a face value of $1,000. The U.S. Treasury's goal is to issue the bond at a price that will prevent arbitrage opportunities.

Term Structure of Interest Rates
Time to Maturity Yield to Maturity
6 months 0.25%
1.0 year 0.40%
1.5 years 0.75%
2.0 years 1.00%
2.5 years 1.50%
3.0 years 2.00%
3.5 years 2.75%
4.0 years 3.00%
4.5 years 3.25%
5.0 years 3.75%
5.5 years 4.00%
6.0 years 5.00%

The U.S. Treasury should issue the five year bond at a price of: ___

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