Question: Sandy has a choice between purchasing $5,000 in Treasury bonds paying 5.3 percent interest and purchasing $5,000 in BB rated corporate bonds with a coupon

Sandy has a choice between purchasing $5,000 in Treasury bonds paying 5.3 percent interest and purchasing $5,000 in BB rated corporate bonds with a coupon rate of 9.2 percent. What is the risk premium on the BB rated corporate bonds?

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