With reference to the data above, what is the default risk premium on 3-year AA-rated corporate bonds?
A) 0.85%
B) 0.95%
C) 3.03%
D) 6.60%
E) There is no default risk on these bonds.

Question

Quizplus · Accepted Answer

The default risk premium is the additional yield that investors require to compensate for the risk of default. In this case, the default risk premium on 3-year AA-rated corporate bonds is 0.85%.

With Reference to the Data Above, What Is the Default