Even though the answers are listed above, I am just trying to figure out the math behind it because my professor does not do a good job of showing/explaining it. Thanks in advance for the help!

Question 1 (15 points-5 each) Suppose that a 1-year zero-coupon bond with a face value of $100 currently trades at $94.34, while a 2-year zero trades at $84.99. You are considering the purchase of a 2-year maturity bond making annual coupon payments. The face value of the bond is $100, and the coupon rate is 12%. What is the yield to maturity of the 2-year zero? 5.99% (or 696) (or 0.059 or 0.06) Time price ytm cf a. pv YTM 1 94.34 0.059996 1 11.3208 (100/B2)-1 284.99 0.084716 112 95.1888 -(100/B3)M0.5-1 106.5096 b. What is the yield to maturity of the 2-year coupon bond? (you can use the RATE function or financial calculator) 8.333% or 0.0833 C. Why do the yields to maturity in parts (a) and (b) differ? (one sentence is all that is required) The ytm of the coupon bond is an average of the ytm of 1 and 2 year zero