Solution-What is the highest expected return these bonds

What is the highest expected return these bonds could have

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Reference no: EM133013702

Question - Juniper Inc. had AA-rated, 10-year bonds outstanding with a yield to maturity of 2%.

a. What is the highest expected return these bonds could have?

b. At the same time, similar maturity US Treasuries had a yield of 1%. Could the Treasuries have an expected return equal to the yield to maturity on the Juniper Inc. 10-year bond? Explain.

c. If the Juniper bonds have a 1.5% chance of default per year and the expected loss rate in the event of default is 50%, what is your estimate of the expected return for these bonds?

Reference no: EM133013702

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What is the highest expected return these bonds could have

Reference no: EM133013702

Reference no: EM133013702

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