PPE Ltd. is rated as AAA on the bond market, and the face value of the bond
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Question:
PPE Ltd. is rated asAAAon the bond market, and the face value of the bond is $100 with a 7% coupon rate. Given that the risk-free rate is 2.7% annually and the bond will mature in 4 years. The marginal mortality rates are provided in the following table.
What is thecumulative mortality rate of PPE ltd.'s bond?
(Keep your answer to 2 decimals and do not input % in the solution box, e.g., if you obtain 2.52612% as the outcome, please input 2.53 in your solution box)
Table 1. Marginal Mortality Rates by Corporate Bond Ratings | |||||
Years after Issuance | |||||
1 | 2 | 3 | 4 | 5 | |
AAA Marginal Rates | 0.00% | 0.01% | 0.08% | 0.07% | 0.11 |
Related Book For
Intermediate Accounting
ISBN: 978-0470616314
IFRS edition volume 2
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
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