The vield to maturitv on 1-vear zero-coupon bonds is currently 7%; the YTM on 2-year zeros is 8%. The Treasury plans to issue a 2-year maturity coupon bond, paying coupons once per year with a

coupon rate of 9%. The face value of the bond is $100.

2 - x fis the vield to maturity on 1 -year zero-coupon bonds is currently 7%; the YTM on 2 -year zeros is 8%. The Treasury plans to issue a 2 -year maturity coupon coupon rate of 9%. The face value of the bond is $100. The yield to maturity on 1-year zero-coupon bonds is currently 7\%; the YTM on 2-year zeros is 8\%. The Treasury plans to issue a 2-y. a. At what price will the bond sell? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price (\$) b. What will the yield to maturity on the bond be? (Do not round intermediate calculations. Round your answer to 3 decimal places.) % c. If the expectations theory of the yield curve is correct, what is the market expectation of the price that the bond will sell for next year? d. Recalculate vour answer to part (c) if you believe in the liquidity preference theory and you belleve that the liquidity premium is 1%. (Dc Price (\$) 5 16 17