Question
Use the various pieces of information provided below to answer the questions that follow: I. On March 15, 2022, the U.S. Treasury reported the following
Use the various pieces of information provided below to answer the questions that follow: I. On March 15, 2022, the U.S. Treasury reported the following yields on Treasury securities of different maturities. Maturity Yield 3-month 0.46% 6-month 0.86% 1-year 1.28% 2-year 1.85% 5-year 2.10% 10-year 2.15% 30-year 2.49% On March 15, 2022, Charter Communications LLC issued a 5.25% coupon bond maturing on 4/1/2053 and a 5.50% coupon bond maturing in 4/1/2063. The bonds were rated BBB- by Standard & Poor's. a. Based on the information provided, calculate the best estimate of the default risk premium on the 5.25% Charter Communications LLC bond maturing in 2053. Be sure to show your calculation. [2.5 points] b. Explain why the two bonds issued by Charter Communications LLC have different coupon rates. [2.5 points]
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