A Treasury bond due in one year has a yield of 4.3%; a Treasury bond due in five years has a yield of 5.06%.A bond issued by Boeing due in five years has a yield of 7.63%; a bond issued by Caterpillar due in one year has a yield of 7.16%.The default risk premiums on the bonds issued by Boeing and Caterpillar, respectively, are
A) 3.33% and 2.10%.
B) 2.57% and 2.86%.
C) 1.2% and 1.0%.
D) 0.76% and 0.47%.
Correct Answer:
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