Question

A $100,000 3% Ontario hydro bond matures November 30, 2016. The current date is November 20, 2013. The price you would pay is 98.9 to buy it. Are market interest rates are higher or lower than 3%?

Answer 1

$Ys=(\frac{100}{98.9}-1) \frac{365}{1106}\times100=0.37$

 interest rates are lower than 3%