# Question

Collingwood Corp. is able to issue its 60-day commercial paper at par with a promised yield of 9 percent per year. The current T-bill yield is 6 percent per year (or 1 percent for the 60-day period), which is also the expected return on the commercial paper, as there is some risk of default. If Collingwood were to default, investors would recover 80 percent of the face value of the debt. Based on this information, what is the probability that Collingwood will default on its commercial paper? Round to two decimals.

## Answer to relevant Questions

When Collingwood Corp. issued its 60-day commercial paper the promised yield was 9 percent, whereas the 60-day T-bill yield was 6 percent. There is a 2-percent chance that Collingwood will default on this debt. If investors ...Determine the selling price of a Government of Canada treasury bill that has a quoted annual interest rate of 2.1 percent and will mature in 180 days. Assume a par value of $1,000.1. Which of the following does not appear in the share structure of a firm?a. Preferred sharesb. Common sharesc. Restricted sharesd. None of the above2. Which of the following statements about preferred shares is false?a. ...Calculate the payoff of fully exercising warrants given the following: 900,000 existing shares are outstanding (n); 100,000 warrants (m) are outstanding and are exercisable at $10 (X). The firm is valued at $10 million (V) ...Calculate the conversion price and conversion value of the convertible bonds given the following: selling price $95; each bond is convertible into four common shares; current common share price $40. Will the convertible ...Post your question

0