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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Currently you can buy a corporate bond sold by a company that has some chance of defaulting in the future. This corporate bond matures in 5 years, pays a 5 percent coupon once a year, and has a face value of $1000.
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a. If there is no chance of default what would be the price of this corporate bond? Hint: if there is no chance of default, then the required rates of return for money at various horizons is given by the Treasury zero yield curve above. Given these rates, what would be the price of the corporate bond?
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