Question
A zero-coupon corporate bond has a face value of $1000 and matures in 1 year. The bond is risky, and with a 5% probability, the
A zero-coupon corporate bond has a face value of $1000 and matures in 1 year. The bond is risky, and with a 5% probability, the company will default and the bondholders will only recieve $250.
The bond currently trades for a price of 883.03
What is thepromisedyield on the bond?
What is theexpected returnon the bond?
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Management And Cost Accounting
Authors: Alnoor Bhimani, Srikant M. Datar, Charles T. Horngren, Madhav V. Rajan
7th Edition
1292232668, 978-1292232669
