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All bonds considered below have a face value of $1000. The two-year zero-coupon bond is trading at $905.13 while the two-year bond with annual coupon
All bonds considered below have a face value of $1000. The two-year zero-coupon bond is trading at $905.13 while the two-year bond with annual coupon rate 7% is trading at $1035.9. In the absence of arbitrage, what is the fair price of the one-year zero-coupon bond?
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