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The following table gives hypothetical yields on various debt instruments: Instrument Yield 5-year US Treasury Bond 1.50% 5-year Corporate Investment-Grade Bond 1.85% 5-year Corporate High-Yield
- The following table gives hypothetical yields on various debt instruments:
Instrument | Yield |
5-year US Treasury Bond | 1.50% |
5-year Corporate Investment-Grade Bond | 1.85% |
5-year Corporate High-Yield Bond | 3.45% |
10-year US Treasury Bond | 1.75% |
10-year Corporate High-Yield Bond | 5.60% |
Calculate the risk premium for:
- a 5-year corporate investment-grade bond
- a 5-year corporate high-yield bond
- a 10-year corporate high-yield bond
Please provide examples
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