QUESTION 37: A zero-coupon bond has a beta of 0.1 and promises to pay $1,000 next year with a probability of 98%. If the bond defaults, it will pay nothing. One-year Treasury securities are yielding 5%, and the equity premium is 7%.

A. What is the time premium for this bond investment? Question a options: 5.5% 2.3% 4.5% 5%

B. What is the risk premium for this bond investment? Question b options: 2.3% 1.7% 1.0% 0.7%

C. What is the fair market value of the bond? Question c options: 937.15 927.15 947.15 955.15

D. What is the promised rate of return on this bond? Round your answer to the nearest tenth of a percent. Question d options: 4.5% 9.9% 7.9% 8.3% PLEASE

PLEASE NO HANDWRITTEN ANSWERS AND SHOW FORMULAS TO GET CORRECT ANSWERS for part A-D of question 37