Sam purchased a 30-year, zero-coupon bond with a yield to maturity (YTM) of 5%. After holding...

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Sam purchased a 30-year, zero-coupon bond with a yield to maturity (YTM) of 5%. After holding it for 5 years, he sold it. (Note: Assume annual compounding.) a. Assume the bond's YTM is 5% when he sells it, what is the IRR of his investment? b. Assume the bond's YTM is 6% when he sells it, what is the IRR of his investment? c. Even if a bond has no chance of default, is your investment risk free if you plan to sell it before it matures? Explain. C... a. Assume the bond's YTM is 5% when he sells it, what is the IRR of his investment? The IRR if the bond's yield to maturity is 5% when he sells it is%. (Round to two decimal places.) b. Assume the bond's YTM is 6% when he sells it, what is the IRR of his investment? The IRR if the bond's yield to maturity is 6% when he sells it is%. (Round to two decimal places.) c. Even if a bond has no chance of default, is your investment risk free if you plan to sell it before it matures? Explain. (Select the best choice below.) O A. Even though the yield to maturity changes, if there is no chance of default, then the bond is risk free. O B. Even without default, if you sell prior to maturity, you are exposed to risk that the YTM may change. OC. There is always a chance of default, so every bond has risk. OD. If there is no chance of default, the investment is risk free no matter when you sell it. Sam purchased a 30-year, zero-coupon bond with a yield to maturity (YTM) of 5%. After holding it for 5 years, he sold it. (Note: Assume annual compounding.) a. Assume the bond's YTM is 5% when he sells it, what is the IRR of his investment? b. Assume the bond's YTM is 6% when he sells it, what is the IRR of his investment? c. Even if a bond has no chance of default, is your investment risk free if you plan to sell it before it matures? Explain. C... a. Assume the bond's YTM is 5% when he sells it, what is the IRR of his investment? The IRR if the bond's yield to maturity is 5% when he sells it is%. (Round to two decimal places.) b. Assume the bond's YTM is 6% when he sells it, what is the IRR of his investment? The IRR if the bond's yield to maturity is 6% when he sells it is%. (Round to two decimal places.) c. Even if a bond has no chance of default, is your investment risk free if you plan to sell it before it matures? Explain. (Select the best choice below.) O A. Even though the yield to maturity changes, if there is no chance of default, then the bond is risk free. O B. Even without default, if you sell prior to maturity, you are exposed to risk that the YTM may change. OC. There is always a chance of default, so every bond has risk. OD. If there is no chance of default, the investment is risk free no matter when you sell it.

Answer rating: 100% (QA)

a To calculate the IRR Internal Rate of Return of Sams investment when the bonds YTM is 5 when he se... View the full answer