You own a 5% bond maturing in two years and priced at 87%. Suppose that there is

Question:

You own a 5% bond maturing in two years and priced at 87%. Suppose that there is a 10% chance that at the bond will default and you will receive only 40% of the promised payment. What is the bond's promised yield to What is its expected yield (i.e., the possible yields weighted by their probabilities)?
Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...