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What will be the yield to maturity on the bonds

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Reference no: EM132531858

Grummon Corporation has issued? zero-coupon corporate bonds with a? five-year maturity? (assume $100 face value? bond). Investors believe there is a 15%chance that Grummon will default on these bonds. If Grummon does? default, investors expect to receive only 30 cents per dollar they are owed. If investors require a 6% expected return on their investment in these? bonds, what will be the price and yield to maturity on these? bonds?

Note?: Assume annual compounding.

Question 1: What will be the price of these? bonds?

Question 2: What will be the yield to maturity on these? bonds, assuming the default does not? materialize?

Reference no: EM132531858

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