Assume zero-coupon yields on default-free securities are as summarized in the following table: ...
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Accounting
Assume zero-coupon yields on default-free securities are as summarized in the following table:
| Maturity (years) | 1 | 2 | 3 |
| Zero-coupon YTM | 4% | 4,5% | 4,75% |
Consider a three-year, default-free security with annual coupon payments and a face value of $1000 that is issued at par. What is the coupon rate of this bond (EAR)? (hint: you can solve this question algebraically but also you can use goal seek in Excel)
A. 4.73%
B. 4.75%
C. 4.55%
D. 4.81%
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