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You are debating buying a junk bond with a CCC credit rating. The market should discount expected cash flows of this bond at 8%. The
You are debating buying a junk bond with a CCC credit rating. The market should discount expected cash flows of this bond at 8%. The bond is a zero coupon bond with YTM (implied by its market price) of 8%. Is this bond over or underpriced? Provide a short justification. You do not need to conduct any calculations.
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