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return of 12%, should you invest in that pu 27. A company has a constant 20% chance of defaulting. In a case of default, the

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return of 12%, should you invest in that pu 27. A company has a constant 20% chance of defaulting. In a case of default, the bond will fall to 40% of its current value. You believe that the bond, based on its risk, should have an expected return of 12%. a) Find the bond's promised ytm. b) Find the bond's default premium

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