Question

The Wall Street Journal reports that the current rate on 10-year Treasury bonds is 6.85 percent,on 20-year Treasury bonds is 7.35 percent,and on a 20-year corporate bond is 8.70 percent.Assume that the maturity risk premium is zero.If the default risk premium and liquidity risk premium on a 10-year corporate bond is the same as that on the 20-year corporate bond,what is the current rate on a 10-year corporate bond.A,8.20% B,8,70% C,8,98% D,7,63%

Answer 1

Answer:

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