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

1. $ 951.60

2. 898.16

3. 804.54

a. A 9.5% 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.)

b. If at the end of the first year the yield curve flattens out at 8.1%, what will be the 1-year holding-period return on the coupon bond? (Round your answer to 2 decimal places.)