You have $1,000 to invest over an investment horizon of three years. The bond market offers various options. You can buy (i) a sequence of three one-year bonds; (ii) a three-year bond; or (iii) a two-year bond followed by a one-year bond. The current yield curve tells you that the one-year, two-year, and three-year yields to maturity are 2.5 percent, 4 percent, and 2.7 percent respectively. You expect that one-year interest rates will be 5 percent next year and 5 percent the year after that. Assuming annual compounding, compute the return on each of the three investments.

Instructions: Round your answers to the nearest hundredth (2 decimal places).

Expected return for (i) = %

Expected return for (ii) = %

Expected return for (iii) = %