The Yield to Maturity on ACL Bonds Maturing in 2005

question 65

Multiple Choice

The yield to maturity on ACL bonds maturing in 2005 is 8.75 percent.The yield to maturity on a similar maturity U.S.Government Treasury bond in 7.06 percent and the yield on Treasury bills is 6.51 percent.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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