Question

The prices of 1, 2, 3, and 4-year zero coupon government bonds are 95.42, 90.36, 85.16, and 78.81, respectively. What is the par coupon on a 4-year coupon bond selling at par?
A) 5.02%
B) 5.43%
C) 5.81%
D) 6.06%

Answer

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