A. Last year Janet purchased a $1,000 face value corporate bond with a 12% annual coupon rate and a 25-year maturity. At the time of the purchase, it had an expected yield to maturity of 9.83%. If Janet sold the bond today for $1,144.78, what rate of return would she have earned for the past year? Do not round intermediate calculations. Round your answer to two decimal places.

B. Interest rates on 4-year Treasury securities are currently 5.3%, while 6-year Treasury securities yield 7.25%. If the pure expectations theory is correct, what does the market believe that 2-year securities will be yielding 4 years from now? Calculate the yield using a geometric average. Do not round intermediate calculations. Round your answer to two decimal places.

C.

A Treasury bond that matures in 10 years has a yield of 5.00%. A 10-year corporate bond has a yield of 9.00%. Assume that the liquidity premium on the corporate bond is 0.55%. What is the default risk premium on the corporate bond? Round your answer to two decimal places.