Question: 1. The annually compounded current par yield and spot rates are as follows: There are two default-free bonds. A and B. Cash flows and prices

1. The annually compounded current par yield and spot rates are as follows: There are two default-free bonds. A and B. Cash flows and prices are as follows: Yield to maturity of Bond A is 4.65% Yield to maturity of Bond B is 6% a. Calculate the one-year and two-year spot rates. b. Given Bond B has a higher yield, can we conclude that Bond B is a better investment? Why or why not? Provide numerical support for your

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