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Q24 (4 pts) A one-year zero-coupon bond with a face value of $1000 is being issued by a corporation at a price of $947.87. The
Q24 (4 pts) A one-year zero-coupon bond with a face value of $1000 is being issued by a corporation at a price of $947.87. The one-year spot rate for Treasury bonds is 2%. What is the corporation's credit spread? A. 2% B. 3.5% C. 4% D. 5% E. 5.5% Q25 (4 pts) A one-year zero-coupon bond with a face value of $1000 is being issued by a corporation at a price of $947.87. You expect that the corporation has a 5% probability of defaulting on its debt within the next year and that your recovery rate will be 75% if there is a default. What is your expected return from investing in this bond? A. 1.3% B. 1.5% C. 3.5% D. 4.2%
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