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The yield to maturity on one-year zero-coupon bonds is currently 9%, the annual YTM on two-year zeroes is 10%, while the annual YTM on three-year

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The yield to maturity on one-year zero-coupon bonds is currently 9%, the annual YTM on two-year zeroes is 10%, while the annual YTM on three-year zeroes is 11%. A company is planning to soon issue a three-year maturity coupon bond, paying coupons once a year with an annual coupon rate of 12%. The face value of the bond is $1,000. (15 points) a a. At what price will the coupon bond sell? b. What will be the yield to maturity on the coupon bond? c. What will be the realized compound yield on the coupon bond if coupons are reinvested on the corresponding forward rates? d. If the expectations theory is correct, what is the expected price of a two-year zero-coupon bond issued in one year? e. If you believe in the liquidity preference hypothesis and you believe that the annual liquidity premium is 1%, what is the expected price of a one-year zero-coupon bond issued at the beginning of year 3

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