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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
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 9 years. The first is a zero-coupon bond that pays $1,000 at maturity The second has a 7.4% coupon rate and pays the $74 coupon once per year The third has a 94% coupon rate and pays the $94 coupon once per year Assume that all bonds are compounded annually a f all three bonds are now priced to eld 7.4% to maturity, what are their prices? Do not round intermediate calculations. Round your answers to, 2 dec mal places. 7.4% Cou 9.4% Cou ero Current prices b-1. If you expect their yields to maturity to be 7.4% at the beginning of next year, what will their prices be then? (Do not round intermediate calculations. Round your answers to 2 decimal places.) 7.4% Coupon 9.4% Cou Price one year from now b-2. What is your rate of retum on each bond during the one-year holding period? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Zero 94%Cou Rate of return
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