A BobCo bond with a face value of $100 matures in one year. There is a 50% chance that BobCo will go bankrupt in the next year, in which case the holder of the bond receives $90. If the current market...

A BobCo bond with a face value of $100 matures in one year. There is a 50% chance that BobCo will go bankrupt in the next year, in which case the holder of the bond receives $90. If the current market price of the BobCo bond is $87, what is the (risk-free) market interest rate in percent?

Jun 09, 2022
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