You own a 5 bond maturing in two years and priced at 87, Finance Basics

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You own a 5 bond maturing in two years and priced at 87

You own a 5% bond maturing in two years and priced at 87%. Suppose that there is a10% chance that at maturity the bond will default and you will receive only 40% of thepromised payment. What is the bond's promised yield to maturity? What is its expectedyield?

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Finance Basics: You own a 5 bond maturing in two years and priced at 87

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Finance Basics: You own a 5 bond maturing in two years and priced at 87

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