Question
The interest rate is 4.7%. A company wants to sell a one-year bond for $1000 today. There is a 8% chance the company will default
The interest rate is 4.7%. A company wants to sell a one-year bond for $1000 today. There is a 8% chance the company will default on its bond and only be able to repay 92% of the $1000 principal amount (and none of the coupon). What coupon rate must the company set for the bond? Give your answer in percentage to the nearest 0.1 percent.
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Research Methods For Business Students
Authors: Mark Saunders, Philip Lewis, Adrian Thornhill
8th Edition
1292208783, 978-1292208787
