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Exercise 5 The following three zero coupon bonds have $1000 as face value and the Maturity in years Price 1 966.56 923.31 2. 3 869.79

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Exercise 5 The following three zero coupon bonds have $1000 as face value and the Maturity in years Price 1 966.56 923.31 2. 3 869.79 A bond has a face value of $1000 a coupon rate of 5% and matures in three years. 1) Calculate the yield to maturity of this bond (5 pts) (A) 4.72% (B) 4.82% [C) 4.48 % (D) 4.13% 2) Calculate the expected rate of return of this bond (5 pts) (A) 3.18% (B) 3.46% [C) 3.94 % (D) 3.57%

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