1. You buy the treasury bond for the price calculated in question 1. You hold the bond for 3 years and sell it. Interest rates and the yield curve are exactly the same over the 3-year holding period,

Year 1 2 3 4 5

YTM on Treasuries 2% 3% 4% 5% 6%

1. At the end of three years, calculate the total you will have from investing the coupon payments.

2. Calculate the selling price of the bond after 3 years.

3. What is the annualized average return over the 3 years?