The yield curve is currently flat at 7%. Based on the following information, price a bond with annual coupons, a face value of $100.00 with a
a. 10% coupon rate and maturity in 2 years.
b. 5% coupon rate and maturity in 2 years.
A bank quotes an interest rate of 14% per annum with quarterly compounding. What is the equivalent rate with?
a) Continuous compounding, and
b) Annual compounding?