For the following questions, assume the normal case that coupon payments are semi-annual. a. What is the yield to maturity on a 12-year, 4.5% coupon bond if the bond is currently selling for $1,000? b. For the bond above, suppose that immediately after purchase market rates change to 3.50%. If you hold the bond for 3 years and then sell it, what is your effective annual return on this investment?

a. The YTM is % (enter response rounded to decimal places; i.e., x.xx%)

b. Your effective annual return is % (enter response rounded to decimal places; i.e., x.xx%)