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Suburban Outfitters Corporation has issued zero - coupon corporate bonds with 5 years to maturity and a face value of $ 3 , 0 0

Suburban Outfitters Corporation has issued zero-coupon corporate bonds with 5 years to
maturity and a face value of $3,000. Investors believe there is a 40% chance that Suburban
Outfitters will default on these bonds. If Suburban Outfitters does default, investors expect to
receive only 50% of the promised payoff at maturity. If investors expected required return is
10.300%, what is the default risk premium on these bonds?

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