Question: Consider three 5 year bonds; each bond has a face value of $100. All bonds mature on the same date. All bonds pay annual coupons

Consider three 5 year bonds; each bond has a face value of $100. All bonds mature on the same date. All bonds pay annual coupons at the same point in time. The coupons and current prices for the three bonds are:

Bond COUPON PRICE
A $10.00 $103.8900
B $7.00 $91.3050
C $9.00 PC

Based on the above information, what is the continuously compounded yield (YTM) on Bond C?

Reminder: You need to answer what is the YTM of Bond C.

[Hint: First compute the price of Bond C (Reference: Module 1 Quiz - Problem 6), then compute YTM for Bond C. Remember, that all the bonds have the same face value of $100.

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