You are a bond trader and observe the following three us


You are a bond trader and observe the following three US government bonds trading in the market: (Face value = $1000.)

A: A ten-year zero coupon bond trading at $446.38.

B: A ten-year 8.4% annual coupon bond trading at $1,000.00.

C: A ten-year 4.2% semi-annual coupon bond trading at $728.89. The term structure is flat.

a) What is the market interest rate that applies to all bonds?

b) What is the YTM on the three bonds?

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Financial Management: You are a bond trader and observe the following three us
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