Question
You own a 1 year 5% zero coupon bond with a Face Value = $100. You think that there is a 30% chance that the
You own a 1 year 5% zero coupon bond with a Face Value = $100. You think that there is a 30% chance that the firm will default and that you will recover nothing if this occurs. If the 1-year Government bond yield is 3% and the risk premium is 2% (so, the expected return is 5%) what is the bonds promised YTM?
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Financial Management
Authors: I.M. Pandey
11th Edition
9325982293, 978-9325982291
