A bond has a promised yield-to-maturity of 10% with a default premium of 4% and a risk premium of 2%. Its expected yield-to-maturity is
A) 6%.
B) 4%.
C) 12%.
D) 16%.

Name: A bond has a promised yield-to-maturity of 10% with a default premium of 4% and a risk premium of 2%. Its expected yield-to-maturity is A) 6%. B) 4%. C) 12%. D) 16%.
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Question

Quizplus · Accepted Answer

The expected yield-to-maturity is the promised yield-to-maturity minus the default premium, which is 10% - 4% = 6%.

A Bond Has a Promised Yield-To-Maturity of 10% with a Default