Question: Problem 3 (8 points) Instruction: Choose the best answer for each of the following questions and please provide explanations to your answer. (b) The following

Problem 3 (8 points) Instruction: Choose the best answer for each of the following questions and please provide explanations to your answer.

Problem 3 (8 points) Instruction: Choose the best answer for each of

(b) The following table shows the market information of three straight term bonds available in the market. Question: Which bond has the highest annual effective yield rate? Which bond has the lowest annual effective yield rate? (A) Bond A has highest yield rate and Bond B has lowest yield rate. (B) Bond A has highest yield rate and Bond C has lowest yield rate. (C) Bond B has highest yield rate and Bond A has lowest yield rate. (D) Bond B has highest yield rate and BondC has lowest yield rate. (E) Bond C has highest yield rate and Bond A has lowest yield rate. (F) Bond C has highest yield rate and Bond B has lowest yield rate. (.) Hint for Problem 3(b): You may consider premium-discount formula.)

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