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A 10% coupon, annual payments, bond maturing in 10 years, is expected to make all coupon payments, but to pay only 50% of par value at maturity. What is the expected yield on this bond if the bond is purchased for $975? (hint: here you need to adjust for the lower expected payoff at bond maturity). Compare this to the yield to maturity you expect if the bond issuer is able to pay off the full amount of par value at maturity.

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