Nike issued a zero-coupon bond with a five-year maturity and a $100 face value. You believe there is a 40% chance that they will default, and if they do default, you expect to receive only 60 cents per dollar of what you are promised. If you require a 6%

expected return on this investment:

a. what will be the price of these bonds, and

2. what will be the yield to maturity on these bonds?

Note: Assume annual compounding.