Question
1. Rank the following instruments in terms of credit risk. In your rankings, use 1 for the greatest credit risk and 6 for the smallest
1. Rank the following instruments in terms of credit risk. In your rankings, use 1 for the greatest credit risk and 6 for the smallest credit risk. Assume a 10 year Treasury trades with a YTM of 5%.
A Ba1 corporate bond ____
A ten-year BBB- corporate bond with a YTM of 7% ____
A secured loan from Argosy Gaming, which is a B- rated firm ____
A senior subordinated bond from Argosy Gaming ____
A ten-year corporate bond with a spread 150bp ____
How exactly do you figure out the magnitude of credit risk for each situation?
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Corporate Finance Reader
Authors: Robert W. Kolb
2nd Edition
1878975536, 978-1878975539
