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 flow is 2.5% You get \$0 PMT if default occurs Use expected value and risk free rate (1.25\%) to solve 8. The last trade price for the bond (observed price) was $1,027.50. What is the market implied credit spread? I am asking for the spread that would apply to the annualized rate NOT I/Y 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 flow is 2.5% You get \$0 PMT if default occurs Use expected value and risk free rate (1.25\%) to solve 8. The last trade price for the bond (observed price) was $1,027.50. What is the market implied credit spread? I am asking for the spread that would apply to the annualized rate NOT I/Y