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Solve a & b Problem 12-16 Question Help In mid-2009, Ralston Purina had AA-rated, six year bonds outstanding with a yield to maturity of 4
Solve a & b
Problem 12-16 Question Help In mid-2009, Ralston Purina had AA-rated, six year bonds outstanding with a yield to maturity of 4 33%. At the time, similar maturity Treasuries had a yield of 4% a. If Ralston Purina's bonds were risk-free, what is your estimate of the expected return for these bonds? b. If you believe Ralston Purina's bonds have 1.5% chance of default per year and that expected loss rate in the event of default is 20%, what is your estimate of the expected return for these bonds? a. It Ralston Purina's bonds were risk free, what is your estimate of the expected return for these bonds? The estimate of the expected return for these bonds is %. (Round to two decimal places) Inc Enter your answer in the answer box and then click Check Answer Clear All Final Check 1 per remaining o At Step by Step Solution
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