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5 You are working as an analyst at a hedge fund Triangle Management which invests in corporate bonds. To this end, you are asked to

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5 You are working as an analyst at a hedge fund Triangle Management which invests in corporate bonds. To this end, you are asked to estimate the risk premium of Tiger charged by investor. The research department informed you that investors usually apply a constant premium over US yields when pricing corporate bonds. a. The prices of US government zero-coupon bonds with a par value of $1500 of different maturities are: Maturity Price 1-year $1494.23 2-year $1481.35 3-year $1453.74 4-year $1431.91 5-year $1403.96 6-year $1374.68 7-year $1340.53 Determine the yield curve. b. Tiger issues a 7-year bond with par value as $1200 and 8% per annum coupon, which is being traded at $1278.68. What is the risk premium? That is, the difference between US yields and the yield used to price the bond of Tiger

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