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This question illustrates the effects of default risk on a bonds yield to maturity. BBB Corp has a risky bond with face value of $1,000,
This question illustrates the effects of default risk on a bonds yield to maturity. BBB Corp has a risky bond with face value of $1,000, annual coupon rate of 12%, maturity of 10 years, and an opportunity cost of capital of 9%. If bondholders expect that there is only a 50% chance that they will receive each of the last five payments (including the principal payment), what is this bonds yield-to-maturity? Enter your answer as a perecent without the %; round your final answer to two decimals.
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