A one-year zero-coupon bond X will pay either $1,000 (par value) or $450 (default value)...
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A one-year zero-coupon bond X will pay either $1,000 (par value) or $450 (default value) at maturity. You observe that this bond currently trades at $890. Assuming risk-free rate of return to be zero, you have INSUFFICIENT information to calculate which of the following?
a.
The risk-neutral probability of default
b.
The physical probability of default
c.
The bond's promised yield to maturity
d.
The percentage of par value recovered in default
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