Prices of zero-coupon bonds reveal the following pattern of forward rates:

Year	Forward Rate
1	4%
2	5
3	7

In addition to the zero-coupon bond, investors also may purchase a 3-year bond making annual payments of $40 with par value $1,000.

a.What is the price of the coupon bond? Price=?

b.What is the yield to maturity of the coupon bond? Yield to maturity=?

c.Under the expectations hypothesis, what is the expected realized compound yield of the coupon bond?Realized compound yield=?

d.If you forecast that the yield curve in 1 year will be flat at 7.0%, what is your forecast for the expected rate of return on the coupon bond for the 1-year holding period?Holding period return=?