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How to calculate EV of this proposed investment?
As part of my retirement portfolio, an advisor has suggested I purchase a "high yield" bond in a company that has some chance of going under during the 3 year term of the bond. Obviously he feels it is unlikely that it WILL fail, but admits there is perhaps a 10% chance the company will fail. The bond is yielding approximately 10%.
How do I calculate EV here, and how can I best understand the risks involved in terms of mathmatics? Any help would be greatly appreciated. bill c |
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