What is the default risk premium on corporate bond

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1. A Treasury bond that matures in 5 years has a yield of 38.00%. A 5-year corporate bond has a yield of 95.00%. Assume that the liquidity premium on the corporate bond is 0.25%. What is the default risk premium on the corporate bond?

2. A bond will pay a coupon of 100 at the end of each of the next three years andwill pay the face value of 1000 at the end of the three-year period. Calculate the bond's Macaulayduration using an annual e ective interest rate of 20%.

Reference no: EM131898760

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