A Treasury Bond Due in One Year Has a Yield

question 41

Multiple Choice

A Treasury bond due in one year has a yield of 4.6%; a Treasury bond due in five years has a yield of 5.6%. A bond issued by Lucent Technologies due in five years has a yield of 8.9%; a bond issued by Exxon due in one year has a yield of 6.2%. The default risk premiums on the bonds issued by Exxon and Lucent Technologies, respectively, are

• A) 1.6% and 3.3%.
• B) 0.5% and 0.7%.
• C) 3.3% and 1.6%.
• D) 0.7% and 0.5%.
• E) None of the options are correct.

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Definitions:

Ballpark Estimate

A rough approximation or preliminary calculation of cost or value, not intended to be exact but giving a general idea.

Risk Analysis

The systematic study and assessment of potential hazards that could impede achieving project or organizational goals, focusing on prevention and mitigation strategies.

Project Management Office

A centralized department within an organization that sets and maintains standards for project management throughout the organization.

Project Management Policies

Set of guidelines and protocols designed to govern project execution, ensuring consistency and alignment with organizational goals.