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*please show excel formulas* 6. Taggart Transcontinental has issued a $1000 zero-coupon bond with a eight-year maturity. Investors believe there is a 10% chance that
*please show excel formulas* 6. Taggart Transcontinental has issued a $1000 zero-coupon bond with a eight-year maturity. Investors believe there is a 10% chance that Taggart Transcontinental will default on these bonds. If they do default, investors expect to receive only 50 cents per dollar they are owed. Assume investors require an 5% return on their investment in these bonds. a. Calculate the yield to maturity on this bond (assume annual compounding). b. Explain why knowing the yield to maturity (including the spread to US Treasuries) is not sufficient to determine the probability of default. C.Calculate the price of a 2-year 1000$ bond with a 5% coupon rate paid semi-annually and a YTM of 4.5% without default risk. 6. Taggart Transcontinental has issued a $1000 zero-coupon bond with a eight-year maturity. Investors believe there is a 10% chance that Taggart Transcontinental will default on these bonds. If they do default, investors expect to receive only 50 cents per dollar they are owed. Assume investors require an 5% return on their investment in these bonds. a. Calculate the yield to maturity on this bond (assume annual compounding). b. Explain why knowing the yield to maturity (including the spread to US Treasuries) is not sufficient to determine the probability of default. C.Calculate the price of a 2-year 1000$ bond with a 5% coupon rate paid semi-annually and a YTM of 4.5% without default risk
*please show excel formulas*
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