Currently, the term structure is as follows: One-year bonds yield 11.00%, two-year zero-coupon bonds yield 12.00%, three-year and longer maturity zero-coupon bonds all yield 13.00%. You are choosing between one, two, and three-year maturity bonds all payingannualcoupons of 12.00%. You strongly believe that at year-end the yield curve will be flat at 13.00%.

a.Calculate the one year, 2 years, and 3 years total rate of return for the three bonds.