Grummon Corporation has issued zero-coupon corporate bonds with a five-year maturity. Investors believe there is a 20%

Question:

Grummon has issued zero-coupon corporate bonds with a five-year Investors believe there is a 20% chance that Grummon will default on these bonds. If Grummon does default, investors expect to receive only 50 cents per dollar they are owed. If investors require a 6% on their investment in these bonds, what will be the price and yield to on these bonds?

Corporation
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