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What is the expected return on the bond

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Reference no: EM132986648

Question - A zero-coupon corporate bond has a face value of $1000 and matures in 1 year. The bond is risky, and with a 5% probability, the company will default and the bondholders will only recieve $250. The bond currently trades for a price of 883.03.

What is the promised yield on the bond?

What is the expected return on the bond?

Reference no: EM132986648

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