Suppose that Casino Royale has issued bonds that mature in 1 year. They currently offer a yield

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Suppose that Casino Royale has issued bonds that mature in 1 year. They currently offer a yield of 20%. However, there is a 50% chance that Casino will default and bondholders will receive nothing. What is the expected yield on the bonds?
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Fundamentals of Corporate Finance

ISBN: 978-0077861629

8th edition

Authors: Richard Brealey, Stewart Myers, Alan Marcus

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