Suppose you purchase a 30-year, zero-coupon bond with a yield to maturity of 6%. You hold the bond for five years before selling it.
a) If the bond's yield to maturity is 6% when you sell it, what is the internal rate of return on your investment?
b) If the bond's yield to maturity is 7% when you sell it, what is the the irr on your investment?
c) Even if a bond has no chance of default, is our investment risk free if you plan to sell it before it matures? Explain