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UST recently issued a consol bond. The market currently charges a one time price equal to p to provide investors with $1 of perpetual credit
UST recently issued a consol bond. The market currently charges a one time price equal to p to provide investors with $1 of perpetual credit protection in the event of default by UST on this debt [that is, the holder of such insurance is entitled to receive exactly $1 at the first passage to default]. Letting r denote the risk-free interest rate, derive an analytical expression for the debt yield in terms of p and r.
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