Question
7. What is the fundamental value of this corporate bond? N = 3, I/Y = 1.25%, PMT = $55, FV = $1,000 Probability of default
7. What is the fundamental value of this corporate bond?
N = 3, I/Y = 1.25%, PMT = $55, FV = $1,000
Probability of default on each cash flow is 2.5%
You get $0 PMT if default occurs
Use expected value and risk free rate (1.25%) to solve
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Fundamentals Of Futures And Options Markets
Authors: John C. Hull
7th Edition
0136103227, 9780136103226
