Today is 1 July, 2022, Georg plans to purchase a corporate bond with a coupon rate of j2=6.84% p.a. and a face value of $100. This corporate bond matures at par. Its maturity date is 1 January, 2025. The yield rate is assumed to be j2= 1.1% p.a. Assume that this corporate bond has a 13% chance of default in any six-month period during its term. Assume, also, that, if default occurs, Georg will receive no further payments at all. Calculate Georg's purchase price. Round your answer to three decimal places.

Answer rating: 100% (QA)

To calculate Georgs purchase price for the corporate bond we need to consider the present value of the bonds future cash flows taking into account the ... View the full answer