The Loughran Corporation has issued zeco-coupon corporate bonds with a five-year maturhy, livestors believe there...
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The Loughran Corporation has issued zeco-coupon corporate bonds with a five-year maturhy, livestors believe there is a 20\% chance that Loughran will dofaut on these bonds. If Loughran does defaul investors expect to recelve 25% of their promised payof at maturity (e.g. $0.25 cents per dolar they are peomisod) If investors require a B oW expected retum on their inventerient in these bonds, which of the following stawenents most accuralely describes the price (per $100 face value) and current YTM of these bonde? A. This bond is priced an 557.85 per 5100 tace value weth a YTM of 80% B. This bond is priced at $6.06 per $100 face value with a YTM of 6.0%. C. This bond is priced at $54.45 per $100 tace value wen a rTM of 12.9% D. This bond is priced at $57.85 per $100 face vilue weth a YTM of 11.6K E. This bond is priced at $5500 per $100 tace value with a VTM of 33%
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