All Three Bonds Pay Interest Annually

question 41

Multiple Choice

$\begin{array}{l}\text { The following information relates to Questions } 15 - 17\\\begin{array} { l c c c c } \hline \text { Bond } & \text { Coupon Rate } & \text { Time-to-Maturity } & \text { Time-to-Maturity } & \text { Spot Rates } \\\hline \mathrm { X } & 8 \% & 3 \text { years } & 1 \text { year } & 8 \% \\\mathrm { Y } & 7 \% & 3 \text { years } & 2 \text { years } & 9 \% \\\mathrm { Z } & 6 \% & 3 \text { years } & 3 \text { years } & 10 \% \\\hline\end{array}\end{array}$
All three bonds pay interest annually.
-based upon the given sequence of spot rates, the yield-to-maturity of bond Z is closest to:

• A) 9.00%.
• B) 9.92%.
• C) 11.93%

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