9.28. A junk bond with a beta of 0.4 will default with 20% probability. If it does,
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9.28. A junk bond with a beta of 0.4 will default with 20% probability. If it does, investors receive only 60% of what is due to them. The risk-free rate is 3% per annum and the risk premium is 5% per annum. What is the price of this bond, its promised rate of return, and its expected rate of return?
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