Question
In: Finance
A bond quotes a rate of return of 9% and will pay $1,000 in one year...
A bond quotes a rate of return of 9% and will pay $1,000 in one year with a probability of 69% and $0 with a probability of 31%.
What is the time premium?
What is the default premium?
Solutions
Expert Solution
Calculation of time premium
$1000 - ( $1000 /109%)
$82.57
Calculation of default premium
$1000*69%=$690
$917.43 - $690
$227.43
jeff jeffy answered 2 years agoRelated Solutions
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