Assuming that the maturity-risk premium on both bonds is


At present, 20-year Treasury bonds are yielding 5.1%, while some 20-year corporate bonds that you are interested in are yielding 9.1%. Assuming that the maturity-risk premium on both bonds is the same and that the liquidity-risk premium on the corporate bonds is 0.25% while it is 0.0% on the Treasury bonds, what is the default-risk premium on the corporate bonds?

Solution Preview :

Prepared by a verified Expert
Finance Basics: Assuming that the maturity-risk premium on both bonds is
Reference No:- TGS02238065

Now Priced at $10 (50% Discount)

Recommended (93%)

Rated (4.5/5)