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problem1. Assume 10-year T-bonds have a yield of 5.30% and 10-year corporate bonds yield 6.75%. As well, corporate bonds have a 0.25% liquidity premium versus a zero liquidity premium for T-bonds, and the maturity risk premium on both Treasury and corporate 10-year bonds is 1.15%. What is default risk premium on corporate bonds?

problem2. The current price of the stock is $34, and the annual risk-free rate is 3%. A call option with a strike price of $31 and 1 year till expiration has a current value of $4.70. What is the value of a put option written on the stock with the same exercise price and expiration date as the call option?

problem3. You just bought a bond that matures in 4 years. The bond has a face value of $1,000 and has a 9% annual coupon. The bond has a current yield of 7.63%. What is the bond's yield to maturity?

Financial Accounting, Accounting

  • Category:- Financial Accounting
  • Reference No.:- M93783

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