Suppose the firm issues a single zero coupon bond a Suppose the maturity value of the bond is $80 Compute the yield and default probability for times to maturity of 1, 2, 3, 4, 5, 10, and 20 years b Repeat part (a), only supposing the maturity value is $120 c Does default probability increase or de...

a We can calculate for a maturity value of 80 mat val 80 80 80 80 80 80 80 time to mat 1 2 3 4 5 10 ...

Suppose the firm issues a single zero-coupon bond. a. Suppose the maturity value of the bond is

Question:

Suppose the firm issues a single zero-coupon bond.
a. Suppose the value of the bond is $80. Compute the yield and default probability for times to of 1, 2, 3, 4, 5, 10, and 20 years.
b. Repeat part (a), only supposing the value is $120.
c. Does default probability increase or decrease with debt Explain.
Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...