Calculate the price of each bond (A, B, and C) at the end of each year until maturity, assuming interest rates remain constant.

Create a graph showing the time path of each bonds value, similar to that shown in Figure 7.2.

What is the expected interest yield for each bond in each year?

2. What is the expected capital gains yield for each bond in each year?

3. What is the total return for each bond in each year?

F I G U R E 7.2 Time Paths of 5\%, 8%, and 11% Coupon Bonds When the Market Rate Remains Constant at 8% Bond Value (\$)