Suppose that in January 2040, you buy a 30-year zero-coupon U.S. Treasury bond with a maturity value of $100,000 and a yield of 5% annually.

(a) How much do you pay for the bond? (Round your answer to the nearest cent.)

(b) Suppose that, 15 years later, interest rates have risen again, to 11%. If you sell your bond to an investor looking for a return of 11%, how much money will you receive? (Round your answer to the nearest cent.)
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(c) Using your answers to parts (a) and (b), what will be the annual yield (assuming annual compounding) on your 15-year investment?

Question

Suppose that in January 2040, you buy a 30-year zero-coupon U.S. Treasury bond with a maturity value of $100,000 and a yield of 5% annually.

(a) How much do you pay for the bond? (Round your answer to the nearest cent.)
 

(b) Suppose that, 15 years later, interest rates have risen again, to 11%. If you sell your bond to an investor looking for a return of 11%, how much money will you receive? (Round your answer to the nearest cent.)
$   

(c) Using your answers to parts (a) and (b), what will be the annual yield (assuming annual compounding) on your 15-year investment?