7. (a) Suppose that you have purchased a 3-year zero-coupon bond with face value of $1000 and a price of $850. If you hold the bond to maturity, what is your annual rate of return? (b) Now suppose you have purchased a 3-year bond with face value of $1000, a 7% annual coupon, and a price of $975. Assuming that you hold the bond to maturity, is the IRR greater or less than the return on the bond in part (a)? 8. Ercel Question. Download the monthly S&P 500 prices from January 1950 until today http://finance.yahoo.com/ (click S&P 500, click Historical Data, click Monthly, click Apply, click Download Data). (a) What is your best estimate for next month's return? (b) What would have been your annualized HPR if you invested as of the start of the index? (c) In what month occurred the lowest monthly return? What happened