and Yields 6 Assume you have a one year investment horizon and are trying to choose among three bonds. All have the same dere of default risk and mature in 8 years. The first is a zero-coupon bond that pays $1,000 at maturity. The second has an 8.5% coupon ate and pays the $85 coupon once per year. The third has a 10.5% coupon rate and pays the $105 coupon once per year. Assume that bonds are compounded annually. a. If all three bonds are now priced to yield 8.5% to maturity, what are their prices? (Do not round Intermediate calculations. Round your answers to 2 decimal places.) Book Zero 8.5 Coupon 10.5% Coupon Current prices Print References b. If you expect their yields to maturity to be 8.5% at the beginning of next year what will their prices be then? (Do not round Intermediate calculations. Round your an yers to 2 decimal places.) Zero 8.5% Coupon 10.54 Coupon Price one year from now c. What is your rate of return on each bond during the one-year holding period? (Do not round Intermediate calculations. Round your answers to 2 decimal places.) Zero 8.5% Coupon 10.5% Coupon Rate of retum 0.00 GEW OM3:01