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Assume you have a one-year investment horizon and are trying to choose among three bonds. All have the same degree of default risk and mature

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Assume you have a one-year investment horizon and are trying to choose among three bonds. All have the same degree 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 rate and pays the $85 coupon once per year. The third has a 10.5% coupon rate and pays the $105 coupon once per year. 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.) 8 .5% Coupon 10.5% Coupon Zero S 520.670 Current prices $ 1056.39 1112.78 b-1. 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 answers to 2 decimal places.) Zero 8.5% Coupon 10.5% Coupon Price one year from $ 564,93 $ 105119 s 1102 371

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