CFIN
5th Edition
ISBN: 9781305661639
Author: Scott Besley, Eugene Brigham
Publisher: Cengage Learning
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Chapter 5, Problem 17PROB
Summary Introduction
Maturity risk premium:
Premium required for accepting the risk on the specific security.
Calculate the maturity risk premium as follows:
Given nine months Treasury bill yield is 2.3%. Yield on three years bond is 2.9% and yield on years bonds yield is 4.3%. Bonds does not have liquidity premium.
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