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What is the current rate on a ten-year corporate bond

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Determinants of Interest Rate for Individual Securities

Problem 1: The Wall Street Journal reports that the current rate on 10-year Treasury bonds is 7.65 percent, on 20-year Treasury bonds is 8.15 percent, and on a 20-year corporate bond is 10.30 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.

Reference no: EM133001913

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