A Treasury Bond Due in One Year Has a Yield

question 106

Multiple Choice

A Treasury bond due in one year has a yield of 4.3%; a Treasury bond due in five years has a yield of 5.06%.A bond issued by Boeing due in five years has a yield of 7.63%; a bond issued by Caterpillar due in one year has a yield of 7.16%.The default risk premiums on the bonds issued by Boeing and Caterpillar, respectively, are

• A)3.33% and 2.10%.
• B)2.57% and 2.86%.
• C)1.2% and 1.0%.
• D)0.76% and 0.47%.

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