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Rank the following instruments in terms of credit risk. In your rankings, use 1 for the greatest credit risk and 6 for the smallest credit risk. Assume a 10 year Treasury trades with a YTM of 5%.

A Ba1 corporate bond ____

A ten-year BBB- corporate bond with a YTM of 7% ____

A secured loan from Argosy Gaming, which is a B- rated firm ____

A senior subordinated bond from Argosy Gaming ____

A ten-year corporate bond with a spread 150bp ____

How exactly do you figure out the magnitude of credit risk for each situation?

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Financial Management, Finance

Category:- Financial Management
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