Question: Sandy has a choice between purchasing % 5,000 in Government of Canada bonds paying 8.5 percent interest or purchasing % 5,000 in BB-rated corporate bonds

Sandy has a choice between purchasing % 5,000 in Government of Canada bonds paying 8.5 percent interest or purchasing % 5,000 in BB-rated corporate bonds with a coupon rate of 11.3 percent.

What is the risk premium on the BB-rated corporate bonds? ____%

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