Multiple Choice
A Government of Canada zero-coupon bond has a yield to maturity of 4%.Investors believe that AB Company will default with certainty at the end of 1 year,only being able to pay 85% of its obligations.The company's bond promises $5,000 next year.What is the price of a one-year zero-coupon bond issued by AB Company?
A) $4,450
B) $4,250
C) $4,086.54
D) $5,000
E) $4,278.85
Correct Answer:
Verified
Correct Answer:
Verified
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