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Problem 3 (8 points) Instruction: Choose the best answer for each of the following questions and please provide explanations to your answer. (b) The following

Problem 3 (8 points) Instruction: Choose the best answer for each of the following questions and please provide explanations to your answer.

(b) The following table shows the market information of three straight term bonds available in the market. Question: Which bond has the highest annual effective yield rate? Which bond has the lowest annual effective yield rate? (A) Bond A has highest yield rate and Bond B has lowest yield rate. (B) Bond A has highest yield rate and Bond C has lowest yield rate. (C) Bond B has highest yield rate and Bond A has lowest yield rate. (D) Bond B has highest yield rate and BondC has lowest yield rate. (E) Bond C has highest yield rate and Bond A has lowest yield rate. (F) Bond C has highest yield rate and Bond B has lowest yield rate. (.) Hint for Problem 3(b): You may consider premium-discount formula.)

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