Bond A is a 10% coupon bond with a face value of $1,000 and a maturity of 3 years. The discount rate (required return, or interest rate) is 8% now or in the future.

A. What is the bond price now, in year 1, in year 2, and in year 3

(P0,P1,P2 and P3)?

B. If you buy the bond now and hold it for one year, what is the

(expected) rate of return?

C. If you buy the bond at year 1 and hold it for one year, what is

the (expected) rate of return?

D. If you buy the bond now and hold it until its maturity, what is

the (expected) rate of return?