In the Following Scenario, How Much Money Does the Protection

question 13

Multiple Choice

In the following scenario, how much money does the protection buyer receive on this three year bond? The bond par value = $1,000. Bond market value = $872. Risk free interest rate = 4.0%. Non-defaulted bond value = $889.

• A) $111
• B) $128
• C) $872
• D) $889

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