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The interest rate on a 21-year Treasury Bond is 8.25%. A comparable maturity, Aaa-rated corporate bond yielding is 11%. Another comparable maturity, but lower quality
The interest rate on a 21-year Treasury Bond is 8.25%. A comparable maturity, Aaa-rated corporate bond yielding is 11%. Another comparable maturity, but lower quality corporate bond has a yield at 14%, which includes liquidity premium of 1.6%.
a. determine the default risk premium on the Aaa-rated bond.
b. determine the default risk premium on the lower quality corporate bond.
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Certainly lets calculate the default risk premium for both bonds a Default Risk Premium on the Aaarated bond Treasury Bond Yield RiskFree Rate 825 Aaa...
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Introduction to Finance Markets Investments and Financial Management
Authors: Melicher Ronald, Norton Edgar
15th edition
9781118800720, 1118492676, 1118800729, 978-1118492673
