Assume the zero-coupon yields on default-free securities are as summarized in the following table:

Maturity	1 year	2 years	3 years	4 years	5 years
Zero-Coupon Yields	6.6%	7.0%	7.4%	7.8%	8.0%

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

6%?

Does this bond trade at a discount, at par, or at a premium?

Note:

Assume annual compounding.

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Part 1

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

6%?

The price is