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A bond issue of a firm matures in one year. The coupon rate is 10% and the bond price in the market is 96.56. A
A bond issue of a firm matures in one year. The coupon rate is 10% and the bond price in the market is 96.56. A government bond of a one-year maturity with the same coupon rate (10%) trades in the market at 103.77. If the risk-free rate is 6%, what is the default probability of the companys bond, given a recovery rate of 50%? (Show your working.)
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