Blue just issued​ zero-coupon corporate bonds with a​ five-year matury​ (assume $100 face​ value, annual ​compounding). The expected return on bonds with such risk is 6%. They will default with a   40% probability. In the event of​ defulat, investors expect to recieve 50 cents per dollar they are owed. What will be the price and yield to maturity​ (YTM) of these​ bonds?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Blue just issued​ zero-coupon corporate bonds with a​ five-year matury​ (assume
$100
face​ value, annual ​compounding). The expected return on bonds with such risk is
6%.
They will default with a  
40%
probability. In the event of​ defulat, investors expect to recieve
50
cents per dollar they are owed. What will be the price and yield to maturity​ (YTM) of these​ bonds?
 
 
 

Question content area bottom

Part 1
The price of these bonds is
​$enter your response here.
​(Round to the nearest​ cent.)
 
The yield to maturity on these bonds is
enter your response here​%.
​(Round to two decimal​ places.)
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