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Bond trading price

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Assume one firm issues two bonds, a one-year bond trading at $100 with a $6 annual coupon and a two-year bond trading at $100 with a $7 annual coupon. Assume recovery is 50% for these two bonds if defaulted, what's the survival probability of this firm for one year and two years?

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Solution Summary

Bond trading price is assessed.

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Answer:
Given that,
For one year bond:
Bond trading price=$100
Annual ...

Solution provided by:
Jayant Kumar, MBA
Education
  • MBA, Indian Institute of Finance
  • Bsc, Madras University
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