Under what circumstances might junk bond

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Reference no: EM131304880

1. The yield to maturity on your new bond is 5.5% with a 10-year remaining life. Immediately after you buy the bond, market interest rates drop significantly, and they remain low for the next 10 years. Over that 10 year period, you receive $55 annually and $1000 at maturity. Did your actual return equal your expected return? Explain.

2. Under what circumstances might a junk bond seem like a reasonable investment?

Reference no: EM131304880

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