Question: Suppose that a 1 -year zero-coupon bond with face value $100 currently sells at $94.34, while a 2-year zero sells at $84.99. You are considering

Suppose that a 1 -year zero-coupon bond with face value $100 currently sells at $94.34, while a 2-year zero sells at $84.99. You are considering the purchase of a 2-year-maturity bond making annual coupon payments. The face value of the bond is $100, and the coupon rate is 12% per year. (a) (3 marks) What is the yield to maturity of the 2-year zero? (b) (3 marks) What is the yield to maturity of the 2-year coupon bond? (c) (3 marks) According to the expectations hypothesis, what is the expected price of the coupon bond at the end of the rst year

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