Can you tell me how to calculate the DRP on the Corporate bonds? Info that I have follows:
5 Year Treasury note 5% interest rate
5 year Corporate bond (high quality) 6% interest rate
5 Year Corporate Bond (low quality) 8% interest rate

Thanks for the help!
Kathy

Generally. DRP is the difference between 10 year US Treasury Bill and the low grade bond having a rating of Baa or lower than that.

You take the Yield to Maturity of the Corporate Bond; (6% on your first example); subtract that from the liquidity of the Corporate Bond; (for example let's say liquidity premium is rated at .25%); and subtract the "Risk Free" Treasury Bond rate of the high quality bond at 5%.

Example:

6%-.25%-5% = .75%