The table below presents data on the yields of various fixed-income instruments for the past two years (last year is denoted T-1, whereas this year is considered as time T). Use these data to answer the following questions.

Instrument Maturity Yield in year T-1 Yield in year T

Treasury Bill 91 days 0.30% 0.50%

AAA-rated Commercial paper 91 days 0.60% 0.90%

Treasury Bond 10 years 3.25% 2.75%

AAA-rated Corporate bond 10 years 5.30% 6.25%

(a.)

Assuming that yield reported on the Treasury bill was a discount yield, calculate the bond equivalent yield on the

three-month T-bill in year T

(b.)

What was the default premium on commercial paper last year?