What is the yield to maturity of the bond

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A risk analyst seeks to find out the credit-linked yield spread on a BB-rated one-year coupon bond issued by a multinational petroleum company. If the prevailing annual risk-free rate is 3.45%, the default rate for BB-rated bonds is 5%, and the loss given default is 55%, then, using the exact formula:

a. What is the spread of the bond relative to the risk-free Treasury of similar maturity ?

b. What is the yield to maturity of the bond?

Reference no: EM133110747

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