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The prices of three gilt strips are shown in the table below. Maturity (in years) Bond Prices 1 92.59 2 84.17 3 76.17 Each strip

The prices of three gilt strips are shown in the table below.

Maturity (in years) Bond Prices
1 92.59
2 84.17
3 76.17

Each strip makes a single payment of 100 at maturity. To finance the government budget deficit, the UK treasury is planning a new issue of a 3-year coupon bond. The new bond has a par value of 1000 and a coupon rate of 5% per annum. Coupon payments are to be made annually. How much should the new bond be priced at?

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