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(Default risk) You buy a very risky bond that promises an 8.8% coupon and return of the $1,000 principal in 10 years. You pay only $500 for the bond. You receive the coupon payments for two years and the bond defaults. After liquidating the firm, the bondholders receive a distribution of $150 per bond at the end of 2.5 years. What is the realized return on your investment?

Submitted: 31 days and 21 hours ago.
Category: Homework
Value: $9
Status: CLOSED
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Already Tried:
150* 2.5 = 375 + 500 = 875

Posted by BusinessTutor 31 days and 15 hours ago.

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31 days and 7 hours ago.

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You didnt answer my question because the risk was 8.8%

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Expert: BusinessTutor
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Answered: 10/24/2009

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MBA - Finance. More than 5000 online tutoring sessions.

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