1. Bond A is a one-year zero-coupon bond with $1,000 face value and a market price of $925.  Bond B is a two-year zero-coupon bond with $1,000 face value and a market price of $895.  Bond C is a two-year bond that trades in the same market as Bonds A and B, has the same risks as these bonds and has a $1,000 face value, and an annual coupon payment of 5%.  You will learn more about coupon bonds in the future.  For now, the following table describes the size and timing of the cash flows for Bond C.

 

Time (yrs)	0	1	2
Coupon payments		$50	$50
Face Value			$1000

 

1. What is the YTM of each bond?