Question: Problem 2 4 - 1 Expected yield You own a bond with an annual coupon rate of 5 % maturing in two years and priced

Problem 24-1 Expected yield
You own a bond with an annual coupon rate of 5% maturing in two years and priced at 87%. Suppose that there is a 10% chance that at maturity the bond will default and you will receive only 40% of the promised payment. Assume a face value of $1,000.
a. What is the bond's promised yield to maturity?
b. What is its expected yield (i.e., the possible yields weighted by their probabilities)?
Note: Enter your answers as a percent rounded to 2 decimal places.
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Problem 24-1 Expected yield You own a bond with an annual

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