A U.S. investor recently purchased a U.S. Treasury bond with a 10-year maturity to earn a yield of 4.8 percent. A European investor just purchased a U.S. AAA-rated, "blue-chip" corporate bond with a 10-year maturity for 5.75 percent. This bond can be converted to cash very quickly, so its liquidity premium is small, 0.1 percent. The spread between U.S. Treasury bonds and AAA-rated bonds with similar maturity and liquidity is 0.2 percent. Another European investor purchased a U.S. BBB-rated, corporate bond with a 10-year maturity. The liquidity premium for this BBB-rated bond is 0.5 percent, and the spread between U.S. Treasury bonds and BBB-rated bonds with similar maturity and liquidity is 1.5 percent. What yield will the European investor earn on the U.S. BBB-rated, corporate bond?

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The Answer of A U.S. investor recently purchased a U.S. Treasury bond with a 10-year maturity to earn a yield of 4.8 percent. A European investor just purchased a U.S. AAA-rated, "blue-chip" corporate bond with a 10-year maturity for 5.75 percent. This bond can be converted to cash very quickly, so its liquidity premium is small, 0.1 percent. The spread between U.S. Treasury bonds and AAA-rated bonds with similar maturity and liquidity is 0.2 percent. Another European investor purchased a U.S. BBB-rated, corporate bond with a 10-year maturity. The liquidity premium for this BBB-rated bond is 0.5 percent, and the spread between U.S. Treasury bonds and BBB-rated bonds with similar maturity and liquidity is 1.5 percent. What yield will the European investor earn on the U.S. BBB-rated, corporate bond?

A US Investor Recently Purchased a U