HomeworkLib
Question

If the yield to maturity on a U.S. Treasury bond that matures in 4 years is...

If the yield to maturity on a U.S. Treasury bond that matures in 4 years is 6.3%, and if the risk-free interest rate is 4.9%, then the default risk premium on this bond is:

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Risk premium on bond =YTM of treasury bond-risk free rate

Risk premium on bond =6.3%-4.9%

Risk premium on bond =1.40%

0 0
Add a comment
Know the answer?
Add Answer to:
If the yield to maturity on a U.S. Treasury bond that matures in 4 years is...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • A Treasury bond that matures in 10 years has a yield of 6%. A 10 year...

    A Treasury bond that matures in 10 years has a yield of 6%. A 10 year corporate bond has a yield of 9%. Assume that the liquidity premium on the corporate bond is 0.5%.What is the default risk premium on the corporate bond

  • A treasury bond that matures in 10 years has a yield of 0.75%. A 10 year...

    A treasury bond that matures in 10 years has a yield of 0.75%. A 10 year bond issued by Akira corporation has a yield of 11% and a liquidity premium of 3.00%. what is the default risk premium of the corporate bond?

  • A Treasury bond that matures in 10 years has a yield of 4.00%. A 10-year corporate...

    A Treasury bond that matures in 10 years has a yield of 4.00%. A 10-year corporate bond has a yield of 7.75%. Assume that the liquidity premium on the corporate bond is 0.50%. What is the default risk premium on the corporate bond? Round your answer to two decimal places. %

  • eBook A Treasury bond that matures in 10 years has a yield of 5.25%. A 10-year...

    eBook A Treasury bond that matures in 10 years has a yield of 5.25%. A 10-year corporate bond has a yield of 9.25%. Assume that the liquidity premium on the corporate bond is 0.30%. What is the default risk premium on the corporate bond? Round your answer to two decimal places.

  • 5 pts > Question 2 A Treasury bond that matures in 10 years has a yield...

    5 pts > Question 2 A Treasury bond that matures in 10 years has a yield of 4.75%. A 10-year corporate bond has a yield of 7.35%. Assume that the liquidity premium on the corporate bond is 0.6%. What is the default risk premium on the corporate bond? Round your answer to two decimal places. Your answer should be between 0.74 and 2.52, rounded to 2 decimal places, with no special characters. Question 3 5 pts Lennar Corporation's one-year bond...

  • A Treasury bond that matures in 10 years has a yield of 4.75%. A 10-year corporate...

    A Treasury bond that matures in 10 years has a yield of 4.75%. A 10-year corporate bond has a yield of 6.70% Assume that the liquidity premium on the corporate bond is 0.6%. What is the default risk premium on the corporate bond? Round your answer to two decimal places. Your answer should be between 0.74 and 2.52, rounded to 2 decimal places, with no specia: characters

  • Question 2 5 pts A Treasury bond that matures in 10 years has a yield of...

    Question 2 5 pts A Treasury bond that matures in 10 years has a yield of 4.75%. A 10-year corporate bond has a yield of 6,95%. Assume that the liquidity premium on the corporate bond is 0.6%. What is the default risk premium on the corporate bond? Round your answer to two decimal places. Your answer should be between 0.74 and 2.52, rounded to 2 decimal places, with no special characters.

  • A treasury bond that matures in 10 years has a yield of 2.0%. A 10-year bond...

    A treasury bond that matures in 10 years has a yield of 2.0%. A 10-year bond issued by Dahlia Corporation has a yield of 8% and a default risk premium of 2.7%. What is the liquidity premium of the corporate bond? 4.70% 12.70% None of these 3.30% 5.30% Suppose that Raven Inc stock is expected to pay a dividend of $1.50 per year. If Raven’s stock has a beta 2.1 and the current stock price is $46, what is the...

  • 18.  Problem 6.17 INTEREST RATE PREMIUMS A 5-year Treasury bond has a 3.35% yield. A 10-year Treasury...

    18.  Problem 6.17 INTEREST RATE PREMIUMS A 5-year Treasury bond has a 3.35% yield. A 10-year Treasury bond yields 6.25%, and a 10-year corporate bond yields 9.55%. The market expects that inflation will average 3.15% over the next 10 years (IP10 = 3.15%). Assume that there is no maturity risk premium (MRP = 0) and that the annual real risk-free rate, r*, will remain constant over the next 10 years. (Hint: Remember that the default risk premium and the liquidity premium...

  • A 5-year Treasury bond has a 4.35% yield. A 10-year Treasury bond yields 6.65%, and a...

    A 5-year Treasury bond has a 4.35% yield. A 10-year Treasury bond yields 6.65%, and a 10-year corporate bond yields 8.65%. The market expects that inflation will average 2.7% over the next 10 years (IP10 = 2.7%). Assume that there is no maturity risk premium (MRP = 0) and that the annual real risk-free rate, r*, will remain constant over the next 10 years. (Hint: Remember that the default risk premium and the liquidity premium are zero for Treasury securities:...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT