What are likely values of p explain

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Reference no: EM131220717

Suppose a Treasury bond costs $100 and promises a payment of $105 in one year.

A bond from the Acme Corporation costs $100 and promises $107 in a year.

Assume that Acme pays the $107 with probability p. With probability 1 - p, Acme defaults and pays nothing. What are likely values of p? Explain.

Reference no: EM131220717

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