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Below is a list of prices for zero-coupon bonds of various maturities. Maturity (Years) 1 2 3 Price of $1,000 Par Bond (Zero- Coupon)

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Below is a list of prices for zero-coupon bonds of various maturities. Maturity (Years) 1 2 3 Price of $1,000 Par Bond (Zero- Coupon) $ 988.00 888.50 842.30 Required: a. A 4.5% coupon $1,000 par bond pays an annual coupon and will mature in 3 years. What should 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 return on the coupon bond? Complete this question by entering your answers in the tabs below. Required A Required B A 4.5% coupon $1,000 par bond pays an annual coupon and will mature in 3 years. What should the yield to maturity on the bond be? Note: Round your answer to 2 decimal places. Yield to maturity % < Required A Required B >

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