# Arizona State University FIN FIN MISC Today is period 0, and the length between the periods is one year. In the fixed-income securities market you observe following five securities….

Arizona State University FIN FIN MISC Today is period 0, and the length between the periods is one year. In the fixed-income securities market you observe following five securities….

# Today is period 0, and the length between the periods is one year.

In the fixed-income securities market you observe following five securities.

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Arizona State University FIN FIN MISC Today is period 0, and the length between the periods is one year. In the fixed-income securities market you observe following five securities….
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Security A: It is a four-year regular coupon bond with an annual coupon payments of \$100.00 and a face value of \$1,000.00. The next coupon payment is one year from now. Security A can be bought or issued at a price of \$945.765 per bond.

Security B: It is a forward contract. The contract matures on period 3, and the forward price is \$2,819.064. The security underlying the forward contract matures on period 4 with a face value of \$3,000.00. You may go short (sell) or long (buy) on this contract.

Security C: It is an annuity. It pays \$1.00 on periods 1, 2, 3, and 4. It can be bought or issued at a price of \$3.0779 per one annuity.

Security D: It is a zero-coupon bond. It matures in period 4, and it has a face value of \$1,000.00. It can be bought or issued at a price of \$X per unit.

Security E: It is a zero-coupon bond. It matures in period 3, and it has a face value of \$1,000.00. It can be bought or issued at a price of \$Y per unit.

As per the no-arbitrage principle, what is the current theoretical value of Security D? In other words, what is the value X?

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