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Assume the zero-coupon yields on default-free securities are as summarized in the following table: 1 year Maturity Zero-Coupon Yields 2 years 4.1% 3 years 4.5%

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Assume the zero-coupon yields on default-free securities are as summarized in the following table: 1 year Maturity Zero-Coupon Yields 2 years 4.1% 3 years 4.5% 4 years 4.8% 5 years 5.1% 3.7% What is the price today of a two-year, default-free security with a face value of $1,000 and an annual coupon rate of 7%? Does this bond trade at a discount, at par, or at a premium? Note: Assume annual compounding. What is the price today of a two-year, default-free security with a face value of $1,000 and an annual coupon rate of 7%? The price is $ (Round to the nearest cent.) Does this bond trade at a discount, at par, or at a premium? (Select the best choice below.) 1. This bond trades at a premium. O 2. This bond trades at par. O 3. This bond trades at a discount. O 4. Not enough information

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