Answered: Assume the following Risk Premiums:…

Assume the following Risk Premiums: DRP ? LP = 0.25% MRP =1.15% 10-year Government bonds yield 4.65% 10-year corporate bonds yield 6.75%. What is the default risk premium on corporate bonds?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 14MC

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Question

Assume the following Risk Premiums:

DRP ?

LP = 0.25%

MRP =1.15%

10-year Government bonds yield 4.65%

10-year corporate bonds yield 6.75%.

What is the default risk premium on corporate bonds?

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