You have invested five million dollars in a corporate bond which supposed to mature in one year.
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Question:
You have invested five million dollars in a corporate bond which supposed to mature in one year. The bond has a 3% chance of defaulting over the remaining life of the bond. You found that you can recover 30% of the invested value in case of default. What would be the expected loss on this bond?
Related Book For
Financial Accounting and Reporting a Global Perspective
ISBN: 978-1408076866
4th edition
Authors: Michel Lebas, Herve Stolowy, Yuan Ding
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