American Airlines bonds have 5 years left to maturity, a 7% coupon (with semi-annual payments), and a face value of $1000. The current rate on a risk-free ten year US treasury note is 1.3%. If you knew that American Airlines would not default over the next 5 years.

What is the maximum you would be willing to spend for an American Airlines bond?

Answer rating: 100% (QA)

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