Remember from class that YTM - Riskfree = sum of risk premiums. Assume the risk-free rate is 1.789 the credit risk premium is 1.036 and the maturity premium is 1.247 what is the yield of the bond? (also this is an estimate)

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Remember from class that YTM - Riskfree = sum of risk premiums.
Assume the risk-free rate is 1.789 the credit risk premium is 1.036 and
the maturity premium is 1.247 what is the yield of the bond? (also this is
an estimate)
Transcribed Image Text:Remember from class that YTM - Riskfree = sum of risk premiums. Assume the risk-free rate is 1.789 the credit risk premium is 1.036 and the maturity premium is 1.247 what is the yield of the bond? (also this is an estimate)
Expert Solution
Step 1 - Information

Risk free rate = 1.789

Credit risk premium = 1.036

Maturity premium = 1.247

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