Question: Consider a bond with uncertain payoffs (non-zero default risk). It is a zero coupon bond (assume annual compounding), a $1,000 face value, and one year

Consider a bond with uncertain payoffs (non-zero
Consider a bond with uncertain payoffs (non-zero default risk). It is a zero coupon bond (assume annual compounding), a $1,000 face value, and one year to maturity. There is a 80% chance the bond will repay in in full and a 20% change that the bond will default, in which case the investor expects to receive $900. The discount rate is 5%, compounded annually. What is the value of this bond and what is it's YTM? O $1,100; 4.0% O $1,000; 5.0% O $933.33; 7.1% O $980.00; 2.0%

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