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Below is a list of prices for zero-coupon bonds of various maturities. Price of $1,000 Par Bond (Zero-Coupon ) $911.35 Maturity (Years ) 1 2

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Below is a list of prices for zero-coupon bonds of various maturities. Price of $1,000 Par Bond (Zero-Coupon ) $911.35 Maturity (Years ) 1 2 869.08 804.94 a. A 6.5% 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? (Round your answer to 2 decimal places.) Yield to maturity b. If at the end of the first year the yield curve flattens out at 8.0%, what will be the 1 year holding-period return on the coupon bond? (Round your answer to 2 decimal places.) Holding-period return

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