Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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If 10-year T-bonds have a yield of 6.2%, 10-year corporate bonds yield 11.9%, 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?
6.41%
5.35%
4.40%
5.46%
5.30%
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Transcribed Image Text:If 10-year T-bonds have a yield of 6.2%, 10-year corporate bonds yield 11.9%, 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? 6.41% 5.35% 4.40% 5.46% 5.30%
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