A United States Treasury bond pays annual interest, has a par value of $1,000, matures...
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A United States Treasury bond pays annual interest, has a par value of $1,000, matures in 7 years, has a coupon rate of 2.13% per annum, and has a yield to maturity (YTM) of 16.82% per annum. The default risk premium on the bond issued by a United States company called Risky Business in the United States is 9.23% per annum. The bond issued by Risky Business pays annual coupon, has a par value of $1,000, matures in 7 years and has a coupon rate of 2.13% per annum. The current intrinsic value of that bond issued by Risky Business is $ Answer . (Note: answer must be accurate to nearest cent, or 2 decimal places but you may leave your answer with more than 2 decimal places.) [Hint: The default risk premium a bond is the difference between the YTM of a risky bond and the YTM of a default-free bond.]
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