A bond with face value of $10,000 has annual coupons, promised coupon rate of 4%,...
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Finance
A bond with face value of $10,000 has annual coupons, promised coupon rate of 4%, and 5 years to maturity. Investors require an expected return of 6% per annum from this bond. The probability of default is 3% per year and the loss given default is 50%. The risk-free rate is 4% per annum. Find the following: a) what is the yield-to-maturity of the bond? b) What is the price of the bond?
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