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Find What is the default premium

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Reference no: EM132678429

Estimate the default premium and the maturity premium given the following

  • three investment opportunities:
  • a Treasury bill with a current interest rate of 2.25%;
  • a Treasury bond with a twenty-year maturity and a current interest rate of 5.75%;
  • and a AAA, corporate bond with a twenty-year maturity and an interest rate of 9%.

Problem 1: What is the default premium?

Reference no: EM132678429

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