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Question
Fly-By-Night Inc. issues $100 face value, zero-coupon, one-year bonds. The current return on one-year, zero-coupon U.S. government bonds is 3.5%. If the Fly-By-Night bonds are selling for $92.00, what is the risk premium for these bonds?A. 8.7%
B. 1.5%
C. 5.2%
D. 8.0%
Answer
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