Suppose you purchase a $30-$year, zero$-$coupon bond with a yield to maturity of $5\mathrm{.}9\%.$ You hold the bond for five years before selling it$.$

a$.$ If the bond's yield to maturity is $5\mathrm{.}9\%$ when you sell it$,$ what is the annualized rate of return of your investment?

b$.$ If the bond's yield to maturity is $6\mathrm{.}9\%$ when you sell it$,$ what is the annualized rate of return of your investment?

c$.$ If the bond's yield to maturity is $4\mathrm{.}9\%$ 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 $5\mathrm{.}9\%$ when you sell it$,$ what is the annualized rate of return of your investment?

The annualized rate of return of your investment is $\%.($Round to two decimal places.$)$

b$.$ If the bond's yield to maturity is $6\mathrm{.}9\%$ when you sell it$,$ what is the annualized rate of return of your investment?

The annualized rate of return of your investment is $\%.($Round to two decimal places.$)$

c$.$ If the bond's yield to maturity is $4\mathrm{.}9\%$ when you sell it$,$ what is the annualized rate of return of your investment?

The annualized rate of return of your investment is $\%.($Round to two decimal places.$)$

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. $($Select the best choice below.$)$

A$.$ Even without default, if you sell prior to maturity, you are exposed to risk that the YTM may change.

B$.$ If there is no chance of default, the investment is risk free no matter when you sell it$.$

C$.$ Even though the yield to maturity changes, if there is no chance of default, then the bond is risk free.

D$.$ There is always a chance of default, so every bond has risk.