A bond promises to pay off $104 one period from now with probability 99% but...
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Finance
A bond promises to pay off $104 one period from now with probability 99% but there is a 1% probability that it will default and pay off 53$. The risk-free rate of return is 8% and all investors are risk neutral. What is the promised return on this bond?
Select one:
a. 12.53
b. 10.53
c. 6.53
d. 8.53
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