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Suppose you purchase a 30-year, zero-coupon bond with a yield to maturity of 5.6%. You hold the bond for five years before selling it. a.
Suppose you purchase a 30-year, zero-coupon bond with a yield to maturity of 5.6%. You hold the bond for five years before selling it. a. If the bond's yield to maturity is 5.6% when you sell it, what is the annualized rate of return of your investment? b. If the bond's yield to maturity is 6.6% when you sell it, what is the annualized rate of return of your investment? c. If the bond's yield to maturity is 4.6% when you sell it, what is the annualized 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. a. If the bond's yield to maturity is 5.6% when you sell it, what is the annualized rate of return of your investment? The annualized rate of return of your investment is 5.6 %. (Round to two decimal places.) b. If the bond's yield to maturity is 6.6% when you sell it, what is the annualized rate of return of your investment? The annualized rate of return of your investment is 0.74% (Round to two decimal places.) c. If the bond's yield to maturity is 4.6% when you sell it, what is the annualized rate of return of your investment? Then the annualized rate of return of your investment is %. (Round to two decimal places.)
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