P42 [question 34 on page 251 of Bodie, et a1 Pn'n@fes qrfwm'mem'r] Assume you have a oneyear investment horizon and are trying to choose among three bonds. All have the same degree of default risk and mature in 10' years. The rst is a zero coupon bond that pays $1000 at maturity. The second has an 80/0 coupon rate and pays the $80 coupon once per annum. The third has a 10% coupon rate and pays the $100 coupon once per annum. a. If a]l three bonds are now priced to yield 8% to maturity, What are their prices?> b. If you expect their yields to maturity to be 8% at the beginning of next year, what will their prices be then? What is your rate of return on each bond during the one year holding period