Suppose you purchase a 30-year Treasury bond with a 6% annual coupon, initially trading at par. In 10 years’ time, the bond’s yield to maturity has risen to 7% (EAR). 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 investment in the bond? c. Is comparing the IRRs a useful way to evaluate the decision to sell the bond?

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A: “Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…