Suppose you purchase a one-year, zero-coupon corporate bond with the following possible outcomes: t = 0 t = 1, Default, CF(1) = 40 Pr (D)=0.20 t = 1, No Default, CF(1) = 100 Pr (ND)=0.80 The values Pr (ND) and Pr (D) are the probabilities of the two possible time t = 1 outcomes, no default and default, respectively. CF(1) are the cash flows that occur in the default and no default states. The market price of the bond at t = 0 is $80. (a) What is the year one expected cash flow, E[CF(1)]? (b) Given the price is $80, what is the expected yield on the bond? (c) Assume the current one-year risk free rate, Rf (0, 1), equals 2%. What is the risk premium investors are requiring to hold the corporate bond?