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Years Spot Rates (zero coupon) 1. 5% 2. 8% 3. 11% Given same issuer and credit risk, determine which buy you will want to buy.

Years Spot Rates (zero coupon)

1. 5%

2. 8%

3. 11%

Given same issuer and credit risk, determine which buy you will want to buy. Note: neither price is consistent with spot rates. par value 1000

Bond A 10% 3 10.65% 98.40 Bond B Coupon Rate Maturity (years) YTM Price 6% 10.75% 88.34

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