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 an 8.7% coupon rate and pays the $87 coupon once per year. The third has a 10.7% coupon rate and pays the $107 coupon once per year. Assume that all bonds are compounded annually.

a. If all three bonds are now priced to yield 8.7% to maturity, what are their prices? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

	Zero	8.7% Coupon	10.7% Coupon
Current prices	$	$	$

b-1. If you expect their yields to maturity to be 8.7% 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	8.7% Coupon	10.7% Coupon
Price one year from now	$	$	$

b-2. 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	8.7% Coupon	10.7% Coupon
Rate of return	%	%	%