Consider the one year, $1000 face value, zero coupon bond issued by Philips Corporation. Assume that the bond's pay-off is uncertain. There is 70% chance that the bond will repay its face value, and 30% chance that the bond will default, and you will receive only $900 in the case of default. If risk free rate is 4%.

What is the yield to maturity (YTM) of this bond?

Answer rating: 100% (QA)

To calculate the yield to maturity YTM of the bond we need to find the discount rate that makes the ... View the full answer