1. Suppose you purchase a 30?-year, ?zero-coupon bond with a yield to maturity of 6.3 %. You hold the bond for five years before selling it. a. If the? bond's yield to maturity is 6.3 % when you sell? it, what is the annualized rate of return of your? investment? b. If the? bond's yield to maturity is 7.3 % when you sell? it, what is the annualized rate of return of your? investment? c. If the? bond's yield to maturity is 5.3 % 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
2. A? BBB-rated corporate bond has a yield to maturity of 7.8 %. A U.S. treasury security has a yield to maturity of 6.4 %. These yields are quoted as APRs with semiannual compounding. Both bonds pay? semi-annual coupons at a rate of 6.5 % and have five years to maturity. a. What is the price? (expressed as a percentage of the face? value) of the treasury? bond? b. What is the price? (expressed as a percentage of the face? value) of the? BBB-rated corporate? bond? c. What is the credit spread on the BBB? bonds?