What is the realized return on abcs investment bthe firm


ABC buys a very risky corporate bond with a par value of $1000. It has a 16.0% coupon and matures in 8 years. They pay only $600 for the bond. a) They receive the coupon payments for three years and the bond defaults. After liquidating the firm, the bondholders receive a distribution of $150 per bond at the end of 3.5 years. What is the realized return on ABC's investment? b) The firm does far better than expected and bondholders receive all of the promised interest and principal payments. What is the realized return on ABC's investment?

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Finance Basics: What is the realized return on abcs investment bthe firm
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