Currently, the term structure is as follows: 1-year zero-coupon bonds yield 7%, 2-year bonds yield 8%, 3-year bonds and longer-maturity bonds all yield 9%. You are choosing between 1-, 2-, and 3-year maturity bonds all paying annual coupons of 8%.
a. What is the total rate of return on each bond? (Do not round intermediate calculations. Round your answers to 2 decimal places. Omit the "%" sign in your response.)
Total Rate of Return
1 Year %
2 Years %
3 Years %