Solution-You are given the following information about a

You are given the following information about a loan

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Reference no: EM132484797

You are given the following information about a loan:

i) The loan's beta is 0.3.

ii) The annual effective yield to maturity on the bond is 8%.

iii) If the bond defaults, 45% of the amount due will be paid.

iv) The market risk premium is 7%.

v) The annual effective risk-free rate is 4%.

Calculate the annual probability of default for this loan that yields the same debt cost of capital as CAPM

Reference no: EM132484797

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You are given the following information about a loan

Reference no: EM132484797

Reference no: EM132484797

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