Suppose That There Are Three Zero Coupon Bonds with Maturity

Multiple Choice

Suppose that there are three zero coupon bonds with maturity date 1 year, 2 year and 3 year respectively. The current price of the 1 year, 2 year and 3 year bonds respectively are $826.45, $718.18 and $640.66 respectively. The yield to maturity of the first year bond is:

A) 21%.
B) 18%.
C) 12%.
D) 11%.