What should the yield to maturity on the bond

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Reference no: EM131899336

Below is a list of prices for zero-coupon bonds of various maturities. Maturity (Years) Price of $1,000 Par Bond (Zero-Coupon)

Maturity (Years) Price of $1,000 Par Bond (Zero coupon)

1 $905.55

2 $900.82

3 $846.30

a) An 5.3% 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

b) If at the end of the first year, the yield curve flattens out at 6.7%, what will be the 1-yr holding period return on the coupon bond?

Reference no: EM131899336

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