Suppose that today you buy a coupon bond with an annual coupon payment of $90. The bond costs you $1,000 and its face is $1,000. The bond has 12 years to maturity.

1) (4 points) What is the coupon rate? What is the yield to maturity on the bond at the time of purchase?

2) (4 points) Consider that 3 years from now, the yield to maturity becomes 7 percent and you decide to sell. What is the price of the bond at which you can sell it for? (Round you answer to 2 decimal places.)

3) (2 points) Define the holding period yield as the realized return if you actually sell the bond before it matures. Letr*be the holding period yield,Tbe the number of holding periods,Cbe the coupon payment and, P₀and P_Tbe the price at the beginning and the end of the holding period, then it follows thatP₀= {C[1-1/(1+r*)^T]}/r*+P_T[1/(1+r*)^T].Based on the assumptions inquestion2),whatisyour holding period yield? (Round your answer to 2 decimal places.)