A 2-year bond with par value $1,000 making annual coupon payments of $122 is priced at $1,000. Required: What is the yield to maturity of the bond? What will be the realized compound yield to maturity if the 1-year interest rate next year turns out to be (i) 8%, (ii) 9%, (iii) 10%?

A) What is the yield to maturity of the bond?

B) What will be the realized compound yield to maturity if the 1-year interest rate next year turns out to be (i) 8%, (ii) 9%, (iii) 10%? Note: Round your answers to 2 decimal places.

R Realized YTM

8% ?%

9% ?%

10% .?%