# Question: There are four debt issues with different priorities each promising

There are four debt issues with different priorities, each promising $30 at maturity.

a. Compute the yield on each debt issue assuming that all four mature in 1 year, 2 years, 5 years, or 10 years.

b. Assuming that each debt issue matures in 5 years, what happens to the yield on each when you vary σ? When you vary r?

a. Compute the yield on each debt issue assuming that all four mature in 1 year, 2 years, 5 years, or 10 years.

b. Assuming that each debt issue matures in 5 years, what happens to the yield on each when you vary σ? When you vary r?

## Answer to relevant Questions

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