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Below is a list of prices for zero-coupon bonds of various maturities. Maturity (Years) Price of...

Below is a list of prices for zero-coupon bonds of various maturities.

Maturity (Years) Price of $1,000 Par Bond (Zero-Coupon)
1 $ 945.80
2 877.23
3 803.34

a. A 4.8% coupon $1,000 par bond pays an annual coupon and will mature in 3 years. What should the yield to maturity on the bond be? (Round your answer to 2 decimal places.)

b. If at the end of the first year the yield curve flattens out at 8.4%, what will be the 1-year holding-period return on the coupon bond? (Round your answer to 2 decimal places.)

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SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 1 year ago
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