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Suppose that Casino Royale has issued bonds that mature in 1 year. They currently offer a yield of 2 8 % . However, there is

Suppose that Casino Royale has issued bonds that mature in

1

year. They currently offer a yield of

28 % .

However, there is a

50 %

chance that Casino will default and bondholders will receive nothing. What is the expected yield on the bonds?

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