Question
An IBM bond promising to pay $100,000 costs $90,090. Time-equivalent Treasuries o er 8%. Setting aside the risk-neutrality and perfect markets assumption for this question
An IBM bond promising to pay $100,000 costs $90,090. Time-equivalent Treasuries o er 8%. Setting aside the risk-neutrality and perfect markets assumption for this question only, what can you say about the risk premium, the default premium, and the liquidity premium?
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Handbook Of The Economics Of Finance Volume 2A
Authors: George M. Constantinides, Milton Harris, Rene M. Stulz
1st Edition
0444535942, 978-0444535948
