Problem 12-09 Consider price quotes and characteristics for two different bonds: Par value Coupon Payment Maturity Coupon Rate Yield to Maturity Price Bond A $100 Annual 3 3 years 119 10:20 $101.98 Bond $100 Annual 3 years 89 10.40% $94.07 At the same time, you observe the spot rates for the next three years: Term 1 year 2 years 3 years Spot (Zero-Coupon) Rates 59 75 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 appears to be the better purchase. Do not found intermediate calculations. Round your answers to the nearest cent The non-arbitrage price of Bond AS The non-arbitrage price of Bond 3:5 Lelet appears to be the better purchase