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You are given the following information on these traded bonds making annual coupon payments: Face Value Coupon rate Maturity Yield-to-maturity A $1,000 0.00% 5.00% $1,000

You are given the following information on these traded bonds making annual coupon payments: Face Value Coupon rate Maturity Yield-to-maturity A $1,000 0.00% 5.00% $1,000 5.00% 5.85% $1,000 10.00% 6.00% a. What is the price of each bond? b. What should be the yield for a two-year zero-coupon bond based on the price of bond B? What would it be based on the price of bond C? (Hint: think of spot rates) You are given the following information on these traded bonds making annual coupon payments: Face Value Coupon rate Maturity Yield-to-maturity A $1,000 0.00% 5.00% $1,000 5.00% 5.85% $1,000 10.00% 6.00% a. What is the price of each bond? b. What should be the yield for a two-year zero-coupon bond based on the price of bond B? What would it be based on the price of bond C? (Hint: think of spot rates)

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