Suppose the current yield on a one-year zero-coupon bond is 3 %, while the yield on a fiveyear zero-coupon bond is 6 %. Neither bond has any risk of default. Suppose you plan to invest for one year.

A. What is the one-year holding period return on the one-year zero-coupon bond?

B. What is the one-year holding period return on the five-year zero-coupon bond if the yield remains 6% in one year?

C. You will earn more over the next year by investing in the five-year bond as long as its yield does not rise above what level?