Suppose you buy a 3 year, zero coupon bond with a face value of $1000 at the timeit is issued.
a. If you buy the bond for $920, what is its nominal yield to maturity?
b. What is the bond's ex-ante real yield to maturity, if the inflation rate is expected toaverage 2% per year over the next 3 years?
c. Suppose that after 2 years, you sell the bond for $990. What nominal holding periodrate of return have you earned?
d. What was your (ex-post) real holding period rate of return if the inflation rate was2% over the two years that you held the bond?