A Treasury bond that matures in 10 years has a yield of 8%. A 10-year corporate bond has a yield of 12%and liquidity premium of 2%. What is the default risk premium on the corporate bonds
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Q: default
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A: corporate bond yield = 9% liquidity premium = 0.5% Treasury bond yield =6%
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- A Treasury bond that matures in 10 years has a yield of 8%. A 10-year corporate bond has a yield of 12%and liquidity premium of 2%. What is the default risk premium on the corporate bonds?
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- A Treasury bond that matures in 10 years has a yield of 6%. A 10-year corporate bond has a yield of 9%. Assume that the liquidity premium on thecorporate bond is 0.5%. What is the default risk premium on the corporatebond?a treasury bond that matures in 10 years has a yield of 6.75%. a 10 year corporate bond has a yield of 9.50%. assume that the liquidity premium on the corporate bond is 0.35%. What is the default risk premium on the corporate bond?A Treasury bond that matures in 10 years has a yield of 5.25%. A 10-year corporate bond has a yield of 8.75%. Assume that the liquidity premium on the corporate bond is 0.45%. What is the default risk premium on the corporate bond? Round your answer to two decimal places.
- If 10-year T-bonds have a yield of 6.2%, 10-year corporate bonds yield 9.2%, the maturity risk premium on all 10-year bonds is 1.3%, and corporate bonds have a 0.4% liquidity premium versus a zero liquidity premium for T-bonds, what is the default risk premium on the corporate bond?If 10-year Treasury bonds have a yield of 4.3%, 10-year corporate bonds yield 6.7%, the maturity risk premium on all 10-year bonds is same, and corporate bonds have a 0.3% liquidity premium vs. a zero liquidity premium for T-bonds,what is the default risk premium on the corporate bond?A 10-year T-bond has a yield of 6%. A 10-year corporate bondwith a rating of AA has a yield of 7.5%. If the corporate bond hasexcellent liquidity, what is an estimate of the corporate bond’sdefault risk premium? (1.5%)
- Assume that the real, risk-free rate of interest is expected to be constant over time at 3 percent, and that the annual yield on a 6-year corporate bond is 8.00 percent, while the annual yield on a 10-year corporate bond is 7.75 percent: you may assume that the default risk and liquidity premium are the same for both bonds. Also assume that the maturity risk premium for all securities can be estimated as MRP, (0.1%) *(t-1), where t is the number of periods until maturity. Finally assume that inflation is expected to be constant at 3 percent for Years 1-6, and then constant at some rate for Years 7-10 (4 years). Given this information, determine what the market must anticipate the average annual rate of inflation will be for Years 7-10. 2.583% O 1979% 2.281% 1.375 % O 1.677 % 4Give typing answer with explanation and conclusion A Treasury bond that matures in 10 years has a yield of 7%. A 10-year corporate bond has a yield of 10%. Assume that the liquidity premium on the corporate bond is 0.8%. What is the default risk premium on the corporate bond? Round your answer to one decimal place.Refer to Table 10-2. a. Assume the interest rate in the market (yield to maturity) goes down to 8 percent for the 10 percent bonds. Using column 2, indicate what the bond price will be with a 10-year, a 20-year, and a 25-year time period. b. Assume the interest rate in the market (yield to maturity) goes up to 12 percent for the 10 percent bonds. Using column 3, indicate what the bond price will be with a 10-year, a 20-year, and a 25-year period. c. Assume the interest rate in the market (yield to maturity) goes down to 8 percent for the 10 percent bonds. If interest rates in the market are going down, which bond would you choose to own? multiple choice 1 10 Years 20 Years 25 Years d. Assume the interest rate in the market (yield to maturity) goes up to 12 percent for the 10 percent bonds. If interest rates in the market are going up, which bond would you choose to own? multiple choice 2 10 Years 20 Years 25 Years
- A)calculate the value of a bond that matures in 12 years and has a 1000 par value . the annual rate is 8% and the markets required yield to marurity on a comparable risk bond is 12% b) what will be the value of the bond be if the payments are semi annual? c) explain the four relationships of a corporate bond.Suppose a 10-year Treasury (risk-free) bond has a YTM of 5% and a Coupon Rate of 5%. Further, a 10-year corporate bond has a YTM of 7% and a coupon rate of 6%. What is the expected risk premium (in dollars) of this bond? a)$44.26 b)$106.18 c)$8.08 d)$71.06A particular long-term corporate bond is quoted at 13.55%. Real risk-free rate is constant at 1% while liquidity risk premium is 1.50%. Maturity risk premium and default risk premium are 4.25% and 2%, respectively. Inflation is expected to be 2% and 4% for the next two years, and constant at 6% for the years after. How many years do this corporate issued bond will mature? (Format: Type the number of years only; without the word "years"; if in full year, do need to put decimal places)