The default risk premiums on the bonds issued

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Reference no: EM131360967

A Treasury bond due in one year has a yield of 5.7%; a Treasury bond due in 5 years has a yield of 6.2%. A bond issued by Ford Motor Company due in 5 years has a yield of 7.5%; a bond issued by Shell Oil due in one year has a yield of 6.5%. The default risk premiums on the bonds issued by Shell and Ford, respectively, are

a. 1.0% and 1.2%

b. 0.7% and 1.5%

c. 1.2% and 1.0%

d. 0.8% and 1.3%

Reference no: EM131360967

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