Assume you have a 1-year investment horizon and are trying to choose among three bonds. All have the same degree of default risk and mature in 10 years. The first is a zero-coupon bond that pays $1,000 at maturity. The second has an 10.0% coupon rate and pays the $100 coupon once per year. The third has a 12.0% coupon rate and pays the $120 coupon once per year. a. If all three bonds are now priced to yield 8% to maturity, what are the prices of: (i) the zero-coupon bond; (ii) the 10.0% coupon bond; (iii) the 12.0% coupon bond? (Round your answers to 2 decimal places.) Answer is complete and correct. Zero Coupon 10% Coupon 12% Coupon $ 1,268.40 Current prices $ 463.19 $ 1,134.20 b. If you expect their yields to maturity to be 8% at the beginning of next year, what will be the price of each bond? (Round your answers to 2 decimal places.) Answer is complete and correct. Zero 10% 12% Coupon Coupon Coupon $ 500.25 $ 1,124.94 $ 1,249.88 Price 1 year from now c. What is your before-tax holding-period return on each bond? (Round your answers to 2 decimal places.) Answer is complete and correct. Pre-tax rate of return Zero Coupon 8.00 % 10% Coupon 8.00% 12% Coupon 8.00 % d. If your tax bracket is 30% on ordinary income and 18% on capital gains income, what will be the after-tax rate of return on each bond? (Round your answers to 2 decimal places.) Answer is complete and correct. Zero Coupon 12% Coupon After-tax rate of return 10% Coupon 5.55 % 5.60 % 5.47 e. Recalculate your answers to (b)-(d) under the assumption that you expect the yields to maturity on each bond to be 7% at the beginning of next year. (Round your answers to 2 decimal places.) Zero Coupon 10% Coupon 12% Coupon Price 1 year from now Pre-tax rate of return After-tax rate of return % % % % % %