A Treasury Bond Due in One Year Has a Yield

question 55

Multiple Choice

A Treasury bond due in one year has a yield of 6.3% while a Treasury bond due in 5 years has a yield of 8.8%. A bond due in 5 years issued by High Country Marketing Corporation has a yield of 9.6% while a bond due in one year issued by High Country Marketing Corporation has a yield of 6.8%. The default risk premiums on the one-year and 5-year bonds issued by High Country Marketing Corp. are respectively ________ and ________.

• A)0.4%, 0.3%
• B)0.4%, 0.5%
• C)0.5%, 0.5%
• D)0.5%, 0.8%

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Definitions:

Vascular System

The network of blood vessels, including arteries, veins, and capillaries, that circulate blood throughout the body.

Arteries

Blood vessels that carry oxygenated blood away from the heart to the body.

Blood

A vital fluid in humans and other animals that delivers necessary substances such as nutrients and oxygen to the cells and transport metabolic waste products away.

Accelerated Breathing Rates

An increase in the pace at which an individual breathes, often a response to exercise or stress.