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Exam Question 6 . 4 . Oyster River Industries expects to issue new BBB bonds. Five years ago, their BBB bonds had a YTM of

Exam Question 6.4. Oyster River Industries expects to issue new BBB bonds. Five years ago, their BBB bonds had a YTM of 4.0% and long-term risk-free government bonds were at 2.0%. The BBB bond risk premium versus government bonds is now 25% higher than it was five years ago. Risk-free long-term government bonds are now yielding 5.0%. What rate should new Oyster River BBB bonds yield? Answer in X.XX% format without the percentage sign, so X.XX.

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