Go to the St. Louis Federal Reserve FRED database, and find data on Moody's Aaa corporate bond
Question:
a. Calculate the spread (difference) between the Baa and Aaa corporate bond yields for the most recent month of data available. What does this difference represent?
b. Calculate the spread again, for the same month but one year prior, and compare the result to your answer to part (a). What do your answers say about how the risk premium has changed over the past year?
c. Identify the month of highest and lowest spreads since the beginning of the year 2000. How do these spreads compare to the most current spread data available? Interpret the results.
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Step by Step Answer:
a The Baa yield for May 2014 was 476 and the Aaa yield that month was 416 Thus th...View the full answer
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Related Book For 
The Economics of Money Banking and Financial Markets
ISBN: 978-0133836790
11th edition
Authors: Frederic S. Mishkin
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