Question
The Widget Company has outstanding debt of three different maturities as outlined in the table. Widget Co. Bonds Maturity Price Coupon one year 100
The Widget Company has outstanding debt of three different maturities as outlined in the table. Widget Co. Bonds Maturity Price Coupon one year 100 7.00% five years 100 10 years 100 8.50% 9.50% U.S. T-Bonds Price Coupon 100 100 100 6.00% 6.50% 7.00% All Widget Company debt ranks side by side and contains cross default provisions. The recovery value for each bond is 20%. The correct price for a one-year CDS with the Widget Company, 9.5% 10-year bond as a reference asset is
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Foundations of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
10th Canadian edition
1259261018, 1259261015, 978-1259024979
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