Question: When Collingwood Corp issued its 60 day commercial paper the promised
When Collingwood Corp. issued its 60-day commercial paper the promised yield was 9 percent, whereas the 60-day T-bill yield was 6 percent. There is a 2-percent chance that Collingwood will default on this debt. If investors were willing to pay the full par-value amount ($1,000) to purchase the paper, how much do they expect to recover in the event of a default?
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