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Business, 14.06.2020 04:57 agilitygirl1

Below is a list of prices for zero-coupon bonds of various maturities. Maturity (Years) Price of $1,000 Par Bond (Zero-Coupon) 1 $ 949.20 2 866.42 3 817.77 a. An 8.6% coupon $1,000 par bond pays an annual coupon and will mature in 3 years. What should the yield to maturity on the bond be? (Round your answer to 2 decimal places.) b. If at the end of the first year the yield curve flattens out at 7.9%, what will be the 1-year holding-period return on the coupon bond? (Round your answer to 2 decimal places.)

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