help in homework

New User?

Fill This Form To Receive Instant Help

Help in Homework
trustpilot ratings
google ratings


Homework answers / question archive / Consider a one year bond with a coupon of 10%

Consider a one year bond with a coupon of 10%

Finance

Consider a one year bond with a coupon of 10%. The current price is $800 with a maturity at par in one year. What is the yield to maturity? Suppose there’s a 50% probability of default on this bond and in the event of a default, there would be a 70% recovery rate with no payment of interest. What is the expected return of this bond.

pur-new-sol

Purchase A New Answer

Custom new solution created by our subject matter experts

GET A QUOTE

Answer Preview

Answer:

a.)

PMT = 100 I = ? 37.5 N = 1

FV = 1000

PV = -800

b.) (.50 x 37.5) + (.50 x -.12.5) = 18.75 + -6.25 = 12.5% Expected Return

 

Sitejabber (5.0)

BBC (5.0)

Trustpilot (4.9)

Google (5.0)