Question: please now Sort Answer 20 points As a financial analyst at Bank of America Merrill Lynch, you want to find out how the credit risks

please now please now Sort Answer 20 points As a financial analyst at Bank

Sort Answer 20 points As a financial analyst at Bank of America Merrill Lynch, you want to find out how the credit risks impact the yield to matunity on a bond. A7 45% bond maturing in three years is priced at 85% of the face value. Suppose that there is a 20% chance that at maturity the bond will default and you will receive only $400 payment a. What is the bond's promised yield to maturity? (sample answer: 15.50%) b. What is its expected yield to maturity? (sample answer: 15.50%)

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