Consider a two - year coupon bond issued by an airline with - a face value of $1,000, - a coupon rate of 3%, - an annual default probability of 5%, - and a risk - free interest rate of 3% per year. 9. Use a binomial tree to value the bond , assuming no recovery. Show your work for partial credit; write your answer in dollars and cents on the line below. A. The value (price, expected present value, etc.) of the bond is $ ___ ___ ___ ___ . ___ ___ 10. Assum ing the recovery rate is 60%, bondholders recover 60% of the face value upon default. Use the binomial tree to calculate the value (price, expected present value, etc.) Show your work for partial credit; write your answer in dollars and cents. A. The value of the bond is $ ___ ___ ___ ___ . ___ ___