3. At the beginning of the year, Brandon purchased a 3-year bond that pays an annual coupon of $100 and a principal of $1000 after three years. The yield to maturity was 4%.

a. At the end of the first year (after the payment of the coupon) the price was $1100. Calculate the investor's holding period return.

b. Calculatetheholdingperiodreturn iftheinvestorsoldthebondrightbeforethe coupon payments.Note, the bond price is still $1100 at the end of the first year.

4. An investor is in a 30% tax bracket. If corporate bonds offer 9% yields, what must municipals offer for the investor to prefer them over corporate bonds?