Question: A bond has 2 years remaining until maturity. Jake determines that the bond has a 6% default rate on the 3rd and 4th coupon

A bond has 2 years remaining until maturity. Jake determines that the

A bond has 2 years remaining until maturity. Jake determines that the bond has a 6% default rate on the 3rd and 4th coupon dates, as long as the default has not yet occurred. If a default occurs, the bond will pay no coupon for that period, but will pay 40% of the redemption amount from the sale of bond collateral. The bond has a nominal annual coupon rate of 8%, payable semiannually, and a face amount of 10,000. Using expected present value, what price should Jake pay based on an annual yield of 10% payable semiannually? 2. What is the promised yield (actual defaults = 0) on the bond? %3D

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