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Suppose you purchase a 30 -year, zero-coupon bond with a yield to maturity of 4%. You hold the bond for five years before selling it.
Suppose you purchase a 30 -year, zero-coupon bond with a yield to maturity of 4%. You hold the bond for five years before selling it. a. If the bond's yield to maturity is 4% when you sell it, what is the internal rate of return of your investment? b. If the bond's yield to maturity is 5% when you sell it, what is the internal rate of return of your investment? c. If the bond's yield to maturity is 3% when you sell it, what is the internal rate of return of your investment? d. Even if a bond has no chance of default, is your investment risk free if you plan to sell it before it matures? Explain. Note: Assume annual compounding. a. If the bond's yield to maturity is 4% when you sell it, what is the internal rate of return of your investment? The IRR of your investment if the bond's yield to maturity is 4% when you sell it is %. (Round to two decimal places
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