Drop down option: BOND A OR BOND B

Problem 12-09 Consider price quotes and characteristics for two different bonds: Bond A Bond B $100 Annual Par value Coupon Payment Maturity Coupon Rate Yield to Maturity Price $100 Annual 3 years 8% 10.20% $94.55 3 years 4% 10.45% $84.09 At the same time, you observe the spot rates for the next three years: Spot (Zero-Coupon) Rates 4% Term 1 year 2 years 3 years 9% 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- appears to be the better purchase