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Suppose that you have purchased a 3-year zero-coupon bond with face value of $1000 and a price of $900. Answer the following questions: a. What
Suppose that you have purchased a 3-year zero-coupon bond with face value of $1000 and a price of $900. Answer the following questions: a. What is the yield to maturity of this bond? b. Suppose you hold this bond to maturity, what is your annual rate of return (annualized holding period return)? c. Suppose you sold this bond after two years for a price of $905, what is your annual rate of return on this bond investment? If the inflation rate is 2% per year, what is your real annual rate of return
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