A U.S. investor recently purchased a U.S. Treasury bond with a 15-year maturity to earn a yield of 4.45 percent. A British investor just purchased a U.S. AAA-rated, "blue-chip" corporate bond with a 15-year maturity for 5.3 percent. This bond can be converted to cash very quickly, so its liquidity premium is small, 0.15 percent. The spread between U.S. Treasury bonds and AAA-rated bonds with similar maturity and liquidity is 0.25 percent. Another British investor purchased a U.S. A rated, corporate bond with a 15-year maturity. The liquidity premium for this A-rated bond is 0.35 percent, and the spread between U.S. Treasury bonds and A-rated bonds with similar maturity and liquidity is 1 percent. What yield will the British investor earn on the U.S. A-rated, corporate bond?

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The Answer of A U.S. investor recently purchased a U.S. Treasury bond with a 15-year maturity to earn a yield of 4.45 percent. A British investor just purchased a U.S. AAA-rated, "blue-chip" corporate bond with a 15-year maturity for 5.3 percent. This bond can be converted to cash very quickly, so its liquidity premium is small, 0.15 percent. The spread between U.S. Treasury bonds and AAA-rated bonds with similar maturity and liquidity is 0.25 percent. Another British investor purchased a U.S. A rated, corporate bond with a 15-year maturity. The liquidity premium for this A-rated bond is 0.35 percent, and the spread between U.S. Treasury bonds and A-rated bonds with similar maturity and liquidity is 1 percent. What yield will the British investor earn on the U.S. A-rated, corporate bond?

A US Investor Recently Purchased a U