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Prices of zero-coupon bonds reveal the following pattern of forward rates: Year 1 2 3...

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Accounting

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Prices of zero-coupon bonds reveal the following pattern of forward rates: Year 1 2 3 Forward Rate 6% 7 8 In addition to the zero-coupon bond, investors also may purchase a 3-year bond making annual payments of $45 with par value $1,000. a. What is the price of the coupon bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Answer is complete and correct. $ 935.23 Price b. What is the yield to maturity of the coupon bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Answer is complete and correct. Yield to maturity 6.97 % c. Under the expectations hypothesis, what is the expected realized compound yield of the coupon bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Answer is complete and correct. Realized compound 7.00 % yield d. If you forecast that the yield curve in 1 year will be flat at 7.0%, what is your forecast for the expected rate of return on the coupon bond for the 1-year holding period? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Answer is complete but not entirely correct. Holding period return 3.27 %

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