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Consider a two-year 5% coupon bond issued with a face value of $1,000. Assume that the bond payoffs are uncertain: There is a 50% chance

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Consider a two-year 5% coupon bond issued with a face value of $1,000. Assume that the bond payoffs are uncertain: There is a 50% chance that the bond repays its face value in full and a 50% chance that the bond will default and you will receive $300. You can assume that the coupon in the first year is certain, but the last coupon is either paid in full or it is not paid if the bond defaults. Because of this uncertainty, the expected return (discount rate) is 6.1%. If the bond defaults and you don't reinvest the first coupon, what is the realized total return? frounded to the closest round number) - 46% 67% 99% -73%

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