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Assume that a 1-year zero-coupon bond with face value R1 000 currently sells at R890.00, while a 2-year zero sells at R736.50. You are considering

Assume that a 1-year zero-coupon bond with face value R1 000 currently sells at R890.00, while a 2-year zero sells at R736.50. You are considering the purchase of a 2- year maturity bond making annual coupon payments. The face value of the bond is R1 000 and the coupon rate is 6.5% per year.

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