1. Heath Food Corporation’s bonds have 7 years remaining to maturity. The bonds have a face value of $1,000 and a yield to maturity of 7%. They pay interest annually and have a 6% coupon rate. What is their current yield? Round your answer to two decimal places. %
2. A Treasury bond that matures in 10 years has a yield of 4%. A 10-year corporate bond has a yield of 9%. Assume that the liquidity premium on the corporate bond is 0.3%. What is the default risk premium on the corporate bond? Round your answer to two decimal places. %