Ask Me Help Desk

Ask Me Help Desk (https://www.askmehelpdesk.com/forum.php)
-   Math & Sciences (https://www.askmehelpdesk.com/forumdisplay.php?f=402)
-   -   Want to learn how to calculate default risk premium (https://www.askmehelpdesk.com/showthread.php?t=288151)

  • Dec 3, 2008, 09:58 PM
    lindabelle
    Want to learn how to calculate default risk premium
    If I am correct I need to use yield spread between a TB which is 6% and a Corporate bond which is 8%. I believe the yield rate is 1.33 (8 /6) I know the correct answer is 1.50?? Does the liquity premium of .05 come into play?? I am 54 years old and have 2 classes to complete masters, I am trying not to freak. I hope someone can help me.
    Thank You very much

    Linda
  • Apr 13, 2010, 08:52 AM
    ang36985
    I am not on this website but I think yes, the 0.5% lp comes into play. 8%-6%=2-0.5=1.50%. I hope this helps.
  • Aug 2, 2010, 04:57 PM
    Gerranamo
    If 10-year T-bonds have a yield of 5.2%, 10 year corporate bonds yield 7.5%, the maturity risk premium on all 10-year bonds is 1.1%, and corporate bonds have a 0.2% liquity premium versus a zero liquity premium for T-bonds, what is the default risk premium on the corporate bond?

    Would the answer be 1.00%?

  • All times are GMT -7. The time now is 01:05 AM.