Suppose there's a corporate bond with face value of $1000 and coupon rate 4% annually that had
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Question:
Suppose there's a corporate bond with face value of $1000 and coupon rate 4% annually that had an original maturity of 10 years. The bond is now two years old and sells for $616.
a. An analyst expects that the bond will only pay out 80% of its promised CFs each year. What should the analyst use as the bond's YTM?
b. If a UST note with the same remaining maturity has a YTM of 2%, what is the yield spread over the Treasury.
Expert Answer:
a Calculating the YTM for the corporate bond with expected 80 payout of promised cash flows Given Fa... View the full answer
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