Question
Assume you make the following investments: - A $10,000 investment in a 10 year T bond that yields 8.5% and - A $20,000 investment in
Assume you make the following investments:
- A $10,000 investment in a 10 year T bond that yields 8.5% and
- A $20,000 investment in a 10- year corporate bond with a Baa rating and yield of 11.1%
Based on this information, what is your estimate of the corporate bonds default risk premium?
A-2.6%
B- 3.6%
C- 3.9%
D- 2.9%
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Financial Management Principles And Practice
Authors: Timothy J. Gallagher, Joseph D. Andrew
3rd Edition
0131768824, 978-0131768826
