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Magnolia Industries 2-year, 7% annual coupon has a probability of default on each payment date (hazard rate) of 2.5% and a recovery rate of 50%.
Magnolia Industries 2-year, 7% annual coupon has a probability of default on each payment date (hazard rate) of 2.5% and a recovery rate of 50%. If the government yield curve is flat at 4% and there is no interest rate volatility the fair value per 100 par of the bond is closest to:
A)105.65
B)103.13
c)104.29
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