Question
PLEASE USE EXCEL SOLVE THIS You are analyzing two bonds for possible purchase. The first bond is a 3-year Treasury bond with a 3% stated
PLEASE USE EXCEL SOLVE THIS
You are analyzing two bonds for possible purchase. The first bond is a 3-year Treasury bond with a 3% stated annual coupon rate (paid semiannually), a face value of $10000, and a current price of $10200. The second bond is a risky 3-year zero coupon corporate bond with a face value of $5000 and a current price of $3500.
a, what is the YTM( stated as a bond-equivalent yield) for the Treasury bond?
b, what is the YTM( stated as a bond-equivalent yield) for the corporate bond?
c. there is some chance the issuer(the company issuing the bond) will default on the corporate bond at the maturity date. if the default happebs, the bond investors will get nothing. If the expected return on the corporate bond is 4.5%( stated as an APR with semiannual compounding), what is the probability of default?
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