The yield to maturity on ACL bonds maturing in 2005 is 8.75 percent.The yield to maturity on a similar maturity U.S.Government Treasury bond in 7.06 percent and the yield on Treasury bills is 6.51 percent.What is the default risk premium on the ACL bond?
A) 2.24%
B) 1.69%
C) 0.55%
D) 8.75%
Correct Answer:
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