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A T-bond that matures in 9 years has a yield of 10.5%. A 9-year corporate bond has a yield of 13%. Assume that the liquidity
A T-bond that matures in 9 years has a yield of 10.5%. A 9-year corporate bond has a yield of 13%. Assume that the liquidity premium on the corporate bond is 0.5%. What is the default risk premium on the corporate bond? Select one: O a. 4.5% O b. 1.0% O c. 1.5% d. 0.5% e. 2.0% Which of the following statements regarding the relationship between interest rate and risk premium is correct? Select one: a. Other things equal, the higher the risk, the higher the real risk- free rate. b. Other things equal, the higher the expected inflation rate, the higher the interest rate. c. Other things equal, the higher the credit rating, the higher the real risk-free rate. d. Other things equal, the longer the maturity, the lower the interest rate. e. Other things equal, the lower the liquidity, the lower the interest
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