Explain liquidity-default risk and maturity risk premiums

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Reference no: EM131054611

1) Which of the following is true of risk premium?

A) T-bills have a have a higher risk premium than that of Treasury bonds.

B) The government bonds have a higher risk premium than that of corporate bonds.

C) The speculative corporate issues have a lower risk premium than that of the higher rated corporate issues.

D) The lower-rated corporate issues have a higher risk premium than that of the higher rated corporate issues.

2) Draw a graph of a typical Treasury yield curve and discuss why it usually takes that shape.

3) Explain liquidity, default risk, and maturity risk premiums.

Reference no: EM131054611

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