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Boris buys a 7 year, $1,000,000.00 face value, 10.000% coupon bond. The bond is priced to yield r(26) = 9.750%, and is secured by a
Boris buys a 7 year, $1,000,000.00 face value, 10.000% coupon bond. The bond is priced to yield r(26) = 9.750%, and is secured by a sinking fund (set up by the issuer with monthly deposits), that earns 7.000% compounded quarterly. On default, Boris claims the balance in the sinking fund. How much does he lose if the issuer defaults after 4 years (just after making their coupon payment, and sinking fund deposit). O a $484,259.72. O b. $562,523.92. O c. $533.174.85. O d. $611,439.04. o e. $489,151.23
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