An underwriter issues a new 7-year C-rated bond at par. The anticipated recovery rate in default of

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An underwriter issues a new 7-year C-rated bond at par. The anticipated recovery rate in default of the bond is expected to be 55%. What should be the coupon rate on the bond so that its expected return is 9%? Assume the transition matrix of exercise 2.

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Financial Modeling

ISBN: 9780262027281

4th Edition

Authors: Simon Benninga

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