Bonds of Zello Corporation with a par value of

$$1,000$ sell for $$960,$ mature in five years, and

have a $7\%$ annual coupon rate paid semiannually.

$($LO $10-6)$

a$.$ Calculate the:

$(1)$ Current yield.

$(2)$ Yield to maturity.

$(3)$ Horizon yield $($also called realized compound

return$)$ for an investor with a three$-$year holding

period and a reinvestment rate of $6\%$ over the

period. At the end of three years, the $7\%$

coupon bonds with two years remaining will sell

to yield $7\%.$