Author Question: If a bonds par value is less than its market price, which of the following can we reasonably state ... (Read 20 times)

Aimless0988 · **on:** Aug 7, 2023

Question 1

If 15-year T-bonds have a yield of 7.3%, 15-year corporate bonds yield 9.9%, the maturity risk premium on all 15-year bonds is 2.1%, and corporate bonds have a 0.6% liquidity premium versus a zero liquidity premium for T-bonds, what is the default risk premium on the corporate bond?

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1.75%

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1.90%

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2.00%

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2.36%

Question 2

If a bond’s par value is less than its market price, which of the following can we reasonably state about the general direction of interest rates in the recent past?

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Interest rates have risen.

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Interest rates have declined.

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Interest rates have remained relatively stable.

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None of the above are correct.

Deonnak85 · **Reply #1 on:** Aug 7, 2023

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