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Suppose the following zero-coupon bonds are trading at the prices shown below per $100 face value. Maturity 1 year 2 years 3 years 4 years

Suppose the following zero-coupon bonds are trading at the prices shown below per $100 face value.

Maturity 1 year 2 years 3 years 4 years

Price $96.92 $92.45 $87.63 $83.06

What is the market price of a four-year, $1,000 coupon bond that pays 5% annual coupons? What is the underlying justification of your calculation?

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