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The company is rated AA and its bonds are trading at 2 per cent above the comparable government bond rate, with the share price being
The company is rated AA and its bonds are trading at 2 per cent above the comparable government bond rate, with the share price being $5.60. Your bank's experience is that the recovery rate in the event of default is 50 per cent. The risk-free rate is equal to 4 per cent. Carry out a credit analysis on a market-premium basis. (round to three decimal places) Probability of repayment 0.888 Risk premium 0.01
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