Multiple Choice
You are given two discount bonds of one-year and two-year maturities, with prices of 95 and 90, respectively. A third bond of three-year maturity and an annual coupon of 8% is trading at par. What is the three-year continuously-compounded zero-coupon rate?
A) 7.7%
B) 7.8%
C) 7.9%
D) 8.0%
Correct Answer:
Verified
Correct Answer:
Verified
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