Question: A Treasury bond due in one year has a yield of 2.2%; a Treasury bond due in 5 years has a yield of 3.6%. A
A Treasury bond due in one year has a yield of 2.2%; a Treasury bond due in 5 years has a yield of 3.6%. A bond issued by BHP due in 5 years has a yield of 4.1%; a bond issued by the Commonwealth Bank due in one year has a yield of 2.5%. The default risk premiums on the bonds issued by the Commonweath Bank and BHP, respectively, are:
2.5%; 1.6%
0.3%; 1.9%
1.1%; 0.5%
0.3%; 0.2%
0.3%; 0.5%
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