**** PLEASE USE IRR TO ANSWER PART B BOTH 12.84 AND 11.06 ARE WRONG ANSWERS ****** You own a bond with an annual coupon

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**** PLEASE USE IRR TO ANSWER PART B BOTH 12.84 AND
11.06 ARE WRONG ANSWERS ******
You own a bond with an annual coupon rate of 5% maturing in two
years and priced at 86%. Suppose that there is a 8% chance that at
maturity the bond will default and you will receive only 44% of the
promised payment. Assume a face value of $1,000.

a. What is the bond’s promised yield to
maturity? (Enter your answer as a
percent rounded to 2 decimal places.)
13.44 IS THE CORRECT ANSWER HERE
b. What is its expected yield (i.e., the
possible yields weighted by their
probabilities)? (Enter your answer as
a percent rounded to 2 decimal places.)
12.84 AND 11.06 ARE WRONG PLEASE USE IRR TO ANSWER THIS
ONE