Question
The rate on one-year Treasury strips currently is 4%, and the yield for one-year BB-rated zero coupon bond is 15%. Assume that if the loan
The rate on one-year Treasury strips currently is 4%, and the yield for one-year BB-rated zero coupon bond is 15%. Assume that if the loan is defaulted, no payments are expected.
a) What is the risk premium paid on this loan?
b) What is the implied default probability of the loan?
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Warren Meyers Academy Stock Market Investing And Day Trading For A Living
Authors: Warren Meyers
1st Edition
979-8215138410
