Card 55 / 59: Suppose you buy a one-year insured debenture priced at $1,000 yielding 10 percent a year. There is a 5 percent chance the issuer will default on the payments only and return your principal. What is your expected return?
A)
$1,000
B)
$1,095
C)
$1,098
D)
$1,100
Answer:
B) $1,095
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