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Consider a one-year XYZ bond that promises a coupon rate of 8% and has a principal (par value) of $1,000. Further, assume the bond is
Consider a one-year XYZ bond that promises a coupon rate of 8% and has a principal (par value) of $1,000. Further, assume the bond is currently trading for $900.
- Determine the Promised Yield to Maturity. [1 point]
- Continuing with part I above, assume there is a 30% probability of default on XYZ bond and if the bond defaults, the bondholders will receive 70% of the principal and interest owed. What is the Expected Yield to Maturity?
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