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Consider a one-year, zero coupon Treasury bill with a YTM of 4% and a face value of $1,000. What is the bond's price to the
Consider a one-year, zero coupon Treasury bill with a YTM of 4% and a face value of $1,000. What is the bond's price to the nearest whole dollar (e.g., $99)?
Assume the bond will default and pay only 90% of the promised principle. What is the bond price to the nearest whole dollar (e.g., $99)? (HINT: Since the 90% payment in the certain default event is guaranteed, you can use the 4% YTM of the default-free bond to price this bond.)
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