Consider price quotes and characteristics for two different bonds:

	Bond A	Bond B
Par value	$100		$100
Coupon Payment	Annual		Annual
Maturity	3 years		3 years
Coupon Rate	9%		5%
Yield to Maturity	10.35%		10.45%
Price	$96.66		$86.55

At the same time, you observe the spot rates for the next three years:

Term	Spot (Zero-Coupon) Rates
1 year	5	%
2 years	7	%
3 years	10	%

Demonstrate whether the price for either of these bonds is consistent with the quoted spot rates. Under these conditions, recommend whether Bond A or Bond B appears to be the better purchase. Do not round intermediate calculations. Round your answers to the nearest cent.

The non-arbitrage price of Bond A: $

The non-arbitrage price of Bond B: $

-Select-Bond ABond BItem 3 appears to be the better purchase.