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A one year spot rate is 1%. A two year spot rate is 3%. A bond matures in two years, its face value is $1000,

A one year spot rate is 1%.

A two year spot rate is 3%.

A bond matures in two years, its face value is $1000, It pays fixed $5 coupon annually. The next coupon is in one year.

What is the price of the bond?

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