Suppose you purchase a30-year, zero-coupon bond with a yield to maturity of 7%. You hold the bond for five years before selling it.

a. If thebond's yield to maturity is 7% when you sellit, what is the internal rate of return of yourinvestment?

b. If thebond's yield to maturity is 8% when you sellit, what is the internal rate of return of yourinvestment?

c. If thebond's yield to maturity is 6% when you sellit, what is the internal rate of return of yourinvestment?

d. Even if a bond has no chance ofdefault, is your investment risk free if you plan to sell it before itmatures? Explain.

Note: Assume annual compounding.

a. If thebond's yield to maturity is 7% when you sellit, what is the internal rate of return of yourinvestment?

The IRR of your investment if thebond's yield to maturity is 7% when you sell it is

nothing

%. (Round to two decimalplaces.)

b. If thebond's yield to maturity is 8% when you sellit, what is the internal rate of return of yourinvestment?

The IRR of your investment if thebond's yield to maturity is 8% when you sell it is

nothing

%. (Round to two decimalplaces.)

c. If thebond's yield to maturity is 6% when you sellit, what is the internal rate of return of yourinvestment?

The IRR of your investment if thebond's yield to maturity is 6% when you sell it is

nothing

%. (Round to two decimalplaces.)

d.Even if a bond has no chance ofdefault, is your investment risk free if you plan to sell it before itmatures? Explain.(Select the best choicebelow.)