Posted by rok on Saturday, August 15, 2009 at 9:28am.
Please see your next post.
Sra
If 10-year T-bonds have a yield of 5.2%, 10-year corporate bonds yield 7.5%, the maturity risk premium on all 10-year bonds is 1.1%, and corporate bonds have a 0.2% liquidity premium versus a zero liquidity premium for T-bonds, what is the default risk premium on the corporate bond?
(Points: 4)
1.00%
1.10%
1.20%
1.30%
1.40%
1.30 r=7.5-5.2=2.3%
r=2.3+drp+0.2+1.1
r=drp+3.6
drp=r-3.6
drp=2.3-3.6=1.3
Related Questions
Finance - If 10 year T bonds have a yield of 5.2%, 10 year corporate bonds yield...
Finance - If 10 year T bonds have a yield of 5.2%, 10 year corporate bonds yield...
Finance - If 10 year T bonds have a yield of 5.2%, 10 year corporate bonds yield...
Finance - If 10 year T bonds have a yield of 5.2%, 10 year corporate bonds yield...
Finance - Interest rate premiums A 5-year Treasury bond has a 5.2 percent yield...
Investing - Kelly Inc's 5 yr bond yield 7.50% and 5 yr T Bonds yield 4.50%....
fin 571 - (Interest-rate risk) Philadelphia Electric has many bonds trading on ...
Finance - Rainier Bros. has 12.0% semiannual coupon bonds outstanding that ...
Finance - Rainier Bros. has 12.0% semiannual coupon bonds outstanding that ...
FINANCE - Yield to call Six years ago, the Singleton Company issued 20-year ...
For Further Reading
