Ch 4. Examples Bond Interest +Principal Price (1 + YTM) Bond Price [Interest +Principalx(1-Pb)+ [Interest +Principal. KPbxRe - 4.1. In the case of one year bond, interest rate is 10% with $1,000 bond. If price of bond is $800, then what is promised yield to maturity Now assume that the likelihood of default is 20% and recovery rate is 60%. What is expected yield to maturity? 4.2. Calculating expected YTM in multiple year bond. The firm is considering the issuance of a five year note. The notes have a principal amount of $1,000 and pay 8% interest annually, with 5 year maturity. The current price of this note is selling at $700. Calculate promised YTM