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Question regarding the probability of bankruptcy

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Reference no: EM131041411

A local radio station issues a one-year zero-coupon bond. The face value is 1000. You believe that the probability of bankruptcy is 8%. The appropriate discount rate (taking into account the risk of the investment) is 1.5%.

I) What is the price of the bond?

II) What is the YTM of the bond?

III) If the 1-year risk-free rate is 1%. what is the yield spread?

Reference no: EM131041411

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