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The Tee Grizzley Corporation has issued zero coupon corporate bonds with five years to maturity. Investors believe there is a 60% chance that Grizzley will
The Tee Grizzley Corporation has issued zero coupon corporate bonds with five years to maturity. Investors believe there is a 60% chance that Grizzley will default on these bonds. If Grizzley does default, investors expect to receive 20% of the promised payoff at maturity. If investors require a 10% expected payoff on these bonds, what is the default risk premium on these bonds? The Tee Grizzley Corporation has issued zero coupon corporate bonds with five years to maturity. Investors believe there is a 60% chance that Grizzley will default on these bonds. If Grizzley does default, investors expect to receive 20% of the promised payoff at maturity. If investors require a 10% expected payoff on these bonds, what is the default risk premium on these bonds
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