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Assume you make the following investments: A $10,000 investment in a 10-year T-bond that has a yield of 11.00% A $20,000 investment in a 10-year
Assume you make the following investments: A $10,000 investment in a 10-year T-bond that has a yield of 11.00% A $20,000 investment in a 10-year corporate bond with an BBB% rating and a yield of 14.30% Based on this information, and the knowledge that the difference in liquidity risk premiums between the two bonds is 0.40%, what is your estimate of the corporate bond's default risk premium? 3.19% 4.06% 4.35% O 2.90%
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