The Yield to Maturity on ACL Bonds Maturing in 2025

question 100

Multiple Choice

The yield to maturity on ACL bonds maturing in 2025 is 8.75%. The yield to maturity on a similar maturity U.S. Government Treasury bond is 7.06%, and the yield on Treasury bills is 6.51%. What is the default risk premium on the ACL bond?

• A) 2.24%
• B) 1.69%
• C) 0.55%
• D) 8.75%

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Definitions:

Medians

The middle value of a data set when it is ordered from least to greatest, or the line in geometry that divides a figure into two equal parts.

Frequencies

The rate at which a vibration occurs that constitutes a wave, either in material (as in sound waves) or in an electromagnetic field (as in radio waves and light).

Averages

Statistical measures that summarize or give an indication of the central tendency or typical value of a set of numbers.

Statistical Generalization

The process of inferring general trends or conclusions about a population based on sample data.