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Business, 07.05.2021 01:00 Emiann222

The bond has face value of $1000 due next year and a promised coupon rate of 4% (paid annually). If the company's project is successful, the bond will pay the promised cash flows next year. If the project is unsuccessful, the firm will liquidate some assets and will be able to pay 86 cents on a dollar of face value on each bond, which is $860. Assume the appropriate discount rate for such bonds is 3% and the probability of project success is 50%. Required:
a. What is the expected cash flow of the bond next year?
b. What is the current price of the bond?
c. What is the yield to maturity on the bond?
d. What is the expected return on the bond?

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The bond has face value of $1000 due next year and a promised coupon rate of 4% (paid annually). If...
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