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What internal rate of return

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Suppose you purchase a 30?-year Treasury bond with a 7 % annual? coupon, initially trading at par. In 10 ?years' time, the? bond's yield to maturity has risen to 8 % ?(EAR). ? (Assume $ 100 face value? bond.)

a. If you sell the bond? now, what internal rate of return will you have earned on your investment in the? bond?

b. If instead you hold the bond to? maturity, what internal rate of return will you earn on your initial investment in the? bond?

c. Is comparing the IRRs in ?(a?) versus ?(b?) a useful way to evaluate the decision to sell the? bond? Explain.

Reference no: EM132223993

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