1. You purchased an annual-interest coupon bond one year ago with six years remaining to maturity at the time of purchase. The coupon interest rate is 10%, and par value is $1,000. At the time you purchased the bond, the yield to maturity was 8%. If you sold the bond after receiving the first interest payment and the bond's yield to maturity had changed to 7%, calculate the annual total rate of return on holding the bond for that year.

b) Calculate the yield to maturity of a 20-year zero-coupon bond that is selling for $372.50 with a value at maturity of $1,000.