Solution-Difference between the interest rates on blue hole

Difference between the interest rates on blue hole

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The Blue Hole Company situated in west New Providence, Nassau has just issued a series of bonds with 5- through 10-year maturities. The company's default risk is 0.5% on 5- year bonds, and grows by 0.2% for each year that's added to the bond's term. Blue Hole's liquidity risk is 1.0% on 5-year bonds, and grows by 0.1% for each additional year of term. Maturity risk on all bonds is 0.2% on 1-year bonds, and grows by 0.1% for each additional year of term. What is the difference between the interest rates on Blue Hole's bonds and those on federal government bonds of like terms?

Reference no: EM132494708

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Difference between the interest rates on blue hole

Reference no: EM132494708

Reference no: EM132494708

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