Consider two types of bonds: A $10$ year to maturity corporate bond and a $10$ year to maturity Treasury bond. We know that Corporate Bonds have default risk.

Discuss the impact on the markets for these two type of bonds & on the risk premium when there is a FALL in the risk of corporate default?

Provide a DISCUSSION of the impact and ILLUSTRATE the impact graphically using two diagrams, one for corporate bonds and one for Treasuries. The diagrams should show the impact on each yield and the impact on the risk premium $[$label your diagram clearly to illustrate the old premium vs$.$ the new premium$].$

hint: draw your diagrams side by side, so you can show the risk premiums as done in lecture.