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Company X has issued zero-coupon corporate bonds with a 13-year maturity. The bond has a face value of $1,000. Investors believe there is a 40%
Company X has issued zero-coupon corporate bonds with a 13-year maturity. The bond has a face value of $1,000. Investors believe there is a 40% chance that the company will default on these bonds. If the company does default, investors expect to recover 66%. If investors require a 5,30% expected return on their investment in these bonds, what is the yield to maturity on these bonds? Final answer should be 6.49.
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