Grummon Corporation has issuedzero-coupon corporate bonds with afive-year maturity(assume $ 100

$100 face valuebond). Investors believe there is a 10 %

10%chance that Grummon will default on these bonds. If Grummon doesdefault, investors expect to receive only 45

45 cents per dollar they are owed. If investors require a 6 %

6% expected return on their investment in thesebonds, what will be the

a. price of thesebonds?

b. yield to maturity on thesebonds?

Note: Assume annual compounding.