The risk free rate is 1.7%, inflation is expected to be 3.5%, a corporate bond has a yield rate of 8.7%, which includes a 1% liquidity premium. What is the default risk premium? (ignore the maturity risk) Group of answer choices a)4.2% b)2.5% c)3.5% d)Not enough information
The risk free rate is 1.7%, inflation is expected to be 3.5%, a corporate bond has a yield rate of 8.7%, which includes a 1% liquidity premium. What is the default risk premium? (ignore the maturity risk) Group of answer choices a)4.2% b)2.5% c)3.5% d)Not enough information
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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The risk free rate is 1.7%, inflation is expected to be 3.5%, a corporate bond has a yield rate of 8.7%, which includes a 1% liquidity premium. What is the default risk premium? (ignore the maturity risk)
Group of answer choices
a)4.2%
b)2.5%
c)3.5%
d)Not enough information
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