Question: Sandy has a choice between purchasing $10,000 in Treasury bonds paying 2% interest and purchasing $10,000 in BB rated corporate bonds with a coupon rate

Sandy has a choice between purchasing $10,000 in Treasury bonds paying 2% interest and purchasing $10,000 in BB rated corporate bonds with a coupon rate of 9%. What is the risk premium if Sandy opts for the Corporate Bonds versus the Treasury Bonds?

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