Problem 15-17

The current yield curve for default-free zero-coupon bonds is as follows:

Maturity (Years)	YTM (%)
1	6.5	%
2	7.5
3	8.5

e. What is the expected total rate of return over the next year on a 3-year zero-coupon bond? (Do not round intermediate calculations. Round your answer to 1 decimal place.)

f. What should be the current price of a 3-year maturity bond with a 8.5% coupon rate paid annually? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

e. What is the expected total rate of return over the next year on a 3-year zero-coupon bond? (Do not round intermediate calculations. Round your answer to 1 decimal place.) Expected total rate of return (3-year bond) % f. What should be the current price of a 3-year maturity bond with a 8.5% coupon rate paid annually? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Current price e. What is the expected total rate of return over the next year on a 3-year zero-coupon bond? (Do not round intermediate calculations. Round your answer to 1 decimal place.) Expected total rate of return (3-year bond) % f. What should be the current price of a 3-year maturity bond with a 8.5% coupon rate paid annually? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Current price