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please answer c-d
There are two corporate bonds, A and B. They both have face value of $100, zero-coupons and one year maturity.
A. Price: $87.5, Default probability: 4.7%, recovery rate: 59%.
B. Price: $91, Default probability: 6.6%, recovery rate: 47%.
a) What is the promised yield of Bond A?
b) What is the promised yield of Bond B?
(c) What is the expected return (i.e., expected YTM) of Bond A?
(d) What is the expected return (i.e., expected YTM) of Bond B?
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