Below is a list of prices for zero- coupon bonds of various maturities.

Maturity. Price of 1000$ par

1. 988

2. 888.50

3. 842.30

a) A 4.5% coulon 1000$ par bond pays an annual coupon and will mature in 3 years. What ahould the yield to maturity on the bond be ?

b) If at the end of the first year the yield curve flattens out at 7.0%, what will be the 1-year holding period reeturn on the coupon bond?