Someone offered you to sell a 2-year, zero coupon bond at the price of $900.

1) If the market rate of return for similar bonds is 8%, would you buy the bond at the offered price?

2) Now there is a news that the bond issuing company has run into financial trouble recently and there is 10% chance that the company will default on its debt/bond payments. Given this new information, how much would you pay for this bond? The market rate of return for similar bonds is 10%