consider a one year discount bond that has a face value of $

consider a one year discount bond that has a face value of $1100 issued by a private firm. The one y… Show more consider a one year discount bond that has a face value of $1100 issued by a private firm. The one year risk-free interest rate is 0.10 (10%). The consensus is that there is a 0.20 (20%) chance that the firm will default on its bonds and pay nothing. If an investor were willing to pay at most $775 for the bond, is that investor risk neutral or risk averse?why? • Show less

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