According to the expectations theory

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Assume that a 1- year discount bond (bond A) with a face value of $1,000 is currently trading at PV = $943.40 offers YTM = 6%, and another 2-year discount bond (bond B) with identical risk features and face value is currently trading at $873.44 and offering YTM = 7%. According to the Expectations Theory, the next year anticipated price on the bond A is _______.

Reference no: EM13771356

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