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%
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%
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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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%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa9bbf261-2582-4bc5-ba02-7d249a43ea7e%2F8cd02f53-793e-478c-80ea-77e1be8c8ef4%2Fp36v69oa_processed.png&w=3840&q=75)
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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