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Consider the following hypothetical bond information: The current yield on a 10-year Treasury security is 2.2% The current yield on a 1-year Treasury bill is
Consider the following hypothetical bond information:
- The current yield on a 10-year Treasury security is 2.2%
- The current yield on a 1-year Treasury bill is 0.7%
- The current yield on a Baa-rated corporate bond with 10 years to maturity is 4.5%
- The current yield on an A-rated corporate bond with 10 years to maturity is 2.8%
Given this information, which response most accurately completes the following statement:
The current default premium on the Baa-rated bond is ____________ and the term premium is _______________.
2.3%; 1.5%
1.5%; 2.3%
1.7%; 2.3%
1.7%, 1.5%
2.8%; 2.3%
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