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You own a 5% bond maturing in two years and priced at 87%. Suppose that there is a 10% chance that at maturity the bond
You own a 5% bond maturing in two years and priced at 87%. Suppose that there is a 10% chance that at maturity the bond will default and you will receive only 40% of the promised payment. a. What is the bonds promised yield to maturity? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Promised yield % b. What is its expected yield?(Do not round intermediate calculations. Round your answer to 2 decimal places.) Expected yield %
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