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You bought a one-year zero coupon $1,000 par value bond for $500. However, you expect the issuer to default with probability 60% and in case
You bought a one-year zero coupon $1,000 par value bond for $500. However, you expect the issuer to default with probability 60% and in case of default you only expect to recover 30% of the par value.
(a) The promised yield to maturity is _____%.
Continued
(b) The expected yield to maturity is _____%.
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