Suppose that a 1-year zero-coupon bond with face value $103 currently sells at $94.34, while a 2- year zero aella at $34.99. You are considering the purchase of a 2-year maturity bond making annual coupon payments. The face 1value of the bond is $100, and the coupon rate is 12% per year. a. What is the yield to maturity of the 3-year zero? The 2-year coupon bond? The one-year zero-coupon bond has a yield to maturity of 6%, as shown below: $10!?! 1+ y] The yield on the two-year zero is 3 .4?2%. as shown below: $100 $34.99 = 2 :'tr 3'2. = DDMTZ = 3.4T2'Etr (1+ 3'2} $94.34 = :5 y1= cocoon = 6.000% The price of the coupon bond is: $1_2 $112 + 2 l .06 {1.03432} Therefore: yield to maturity for the coupon bond = 3 333% = $106.51