The correct answer is the shaded one - A.

Please write your answers with each step in a clear and logical manner. Please treat it as a short answer question.

E. Both answer A and answer D are correct A12. You observe the yields of the following government bonds (issued by the same government): Coupon Rate Bond Par Time to Maturity (Years) 0.5 B D 1 Yield to Maturity (% 4.08 4.12 6.71 7.45 0 0 6 8 $100 $100 $100 $100 1.5 2 The coupon a) b) c) d) is paid semi-annually. What are the zero rates, 20,1.5 and 20,2? 20,1.5 = 6.79% and 20,2 = 7,85% 20,1.5 = 6.52% and 20.2 = 7.85% 20,1.5 = 6.79% and 20.2 = 8.05% 20,1.5 = 5.50% and 20.2 = 8.05% None of the above