Problem 23-1 Expected yield

You own a bond with an annual coupon rate of 8% maturing in two years and priced at 90%. Suppose that there is a 10% chance that at maturity the bond will default and you will receive only 43% of the promised payment. Assume a face value of $1,000. a. What is the bonds promised yield to maturity? (Enter your answer as a percent rounded to 2 decimal places.)

b. What is its expected yield (i.e., the possible yields weighted by their probabilities)? (Enter your answer as a percent rounded to 2 decimal places.)