Suppose that on January $1,2024$ you purchase a $$1,000$ face value corporate bond with an $4\%$ coupon rate and a maturity of January $1,2034.$

On January $1,2024,$ the zero coupon yields on U$.$S$.$ Treasury securities maturing over the next $10$ years are given below.

Suppose that the corporate bond that you purchased has a $150$ basis point risk premium for its cash flows at all maturities.

What price would you be willing to pay for the bond?

Zero Coupon

US Treasury

Maturity Yields

$7/1/20242\mathrm{.}02$

$1/1/20252\mathrm{.}12$

$7/1/20252\mathrm{.}22$

$1/1/20262\mathrm{.}32$

$7/1/20262\mathrm{.}42$

$1/1/20272\mathrm{.}52$

$7/1/20272\mathrm{.}62$

$1/1/20282\mathrm{.}72$

$7/1/20282\mathrm{.}82$

$1/1/20292\mathrm{.}92$

$7/1/20293\mathrm{.}02$

$1/1/20303\mathrm{.}12$

$7/1/20303\mathrm{.}22$

$1/1/20313\mathrm{.}32$

$7/1/20313\mathrm{.}42$

$1/1/20323\mathrm{.}52$

$7/1/20323\mathrm{.}62$

$1/1/20333\mathrm{.}72$

$7/1/20333\mathrm{.}82$

$1/1/20343\mathrm{.}92$