Question: A one - year zero - coupon bond with face value of $ 1 0 0 0 has a 4 0 % chance of default

A one-year zero-coupon bond with face value of $1000 has a 40% chance of default (and zero payout). Because of its risk, it demands a risk premium of 6%. The risk-free interest rate is 5%. What is the bond's price today? What is the bond's YTM?

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