Maturity and Default Risk Premiums] Following is interest rate information currently being observed by the Electronic Publishing Corporation:   One-year U.S. government securities 4.5%      One-year bank loans 6.0%      Five-year U.S. government securities 7.0%   Five-year bank loans 9.5%                     A. What is the amount of the maturity risk premium on one-year versus five-year U.S. government securities?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Maturity and Default Risk Premiums] Following is interest rate information currently being observed by the Electronic Publishing Corporation:

 

One-year U.S. government securities 4.5%

 

   One-year bank loans 6.0%

 

   Five-year U.S. government securities 7.0%

 

Five-year bank loans 9.5%

 

               

 

A. What is the amount of the maturity risk premium on one-year versus five-year U.S. government securities?

 

B. What is the amount of the maturity risk premium on one-year versus five-year bank loans?

 

C. What is the default risk premium on one-year bank loans and on five-year bank loans?

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