question archive In? mid-2012, Ralston Purina had? AA-rated, 10-year bonds outstanding with a yield to maturity of 2
In? mid-2012, Ralston Purina had? AA-rated, 10-year bonds outstanding with a yield to maturity of 2
Subject:FinancePrice: Bought3
In? mid-2012, Ralston Purina had? AA-rated, 10-year bonds outstanding with a yield to maturity of 2.24 %. a.
What is the highest expected return these bonds could? have?
b. At the? time, similar maturity Treasuries had a yield of 1.24 %. Could these bonds actually have an expected return equal to your answer in part ?(a?)?
c. If you believe Ralston? Purina's bonds have 1.3 % chance of default per? year, and that expected loss rate in the event of default is 47 %, what is your estimate of the expected return for these? bonds?
