A Treasury bond due in one year has a yield of 4.6%; a Treasury bond due in five years has a yield of 5.6%.A bond issued by Lucent Technologies due in five years has a yield of 8.9%; a bond issued by Exxon due in one year has a yield of 6.2%.The default risk premiums on the bonds issued by Exxon and Lucent Technologies, respectively, are
A) 1.6% and 3.3%.
B) 0.5% and 0.7%.
C) 3.3% and 1.6%.
D) 0.7% and 0.5%.
Correct Answer:
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