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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?
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