What is the price of the bond

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Problem: A local radio station issues a one-year zero-coupon bond. the face value is 1000. You believe that the probability of bankruptcy is 8%. The appropriate discount rate (taking into account the risk of the investment) is 1.5%.

Required:

I) What is the price of the bond?

II) What is the YTM of the bond?

III) If the 1-year risk-free rate is 1%. what is the yield spread?

Reference no: EM132455671

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