Consider the Leverage Unlimited, Inc., zero coupon bonds of 2016. The bonds were issued in 1998 for $100. Determine the yield to maturity (to the nearest 1/10 of 1 percent) if the bonds are purchased at the

a. Issue price in 1998. (Note: To avoid a fractional year holding period, assume that the issue and maturity dates are at the midpoint-July 1-of the respec- tive years.)

b. Market price as of July 1, 2012, of $750.

c. Explain why the returns calculated in Parts a and b are different. PO85