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?