Problem 1. Fill in the table below for the following zero-coupon bonds, all of which have par values of $1,000.

Price	Maturity (years)	Bond-equivalent yield to maturity
$400	20	-
$500	20	-
$500	10	-
-	10	10%
-	10	8%
$400	-	8%

Problem 2. A 30-year maturity, 8% coupon bond paying coupons semiannually is callable in 5 years at a call price of $1,100. The bond currently sells at a yield to maturity of 7% (3.5% per half-year).

What is the yield to call?

What is the yield to call if the call price is only $1,050?

What is the yield to call if the call price is $1,100, but the bond can be called in 2 years instead of 5 years?

Problem 3. The term structure for zero-coupon bonds is currently:

Maturity (years)	Yield to maturity
1	4%
2	5%
3	6%

Next year at this time, you expect it to be:

Maturity (years)	Yield to maturity
1	5%
2	6%
3	7%

What do you expect the rate of return to be over the coming year on a 3-year zero-coupon bond?

Under the expectations theory, what yields to maturity does the market expect to observe on 1- and 2-year zeros at the end of the year?