Question: Given the zero coupon yields above, what is the arbitrage free, annual YTM of a $10 annual coupon (paid annually), 5 year maturity, $100 face

Given the zero coupon yields above, what is the arbitrage free, annual YTM of a $10 annual coupon (paid annually), 5 year maturity, $100 face value bond?

5.3663%

4.8823%

This is simply the average of the zero coupon rates. You need to find the price then the YTM on the coupon bond.

5.2806%

10.000%

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