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Question
Use the following interest rate data to answer the next five questions:Treasury Bills, 90 days 4.20%
Commercial Paper, 90 days 4.84%
Treasury Bill, 1 year 4.67%
Treasury Note, 2 year 5.25%
Corporate Bond AA, 20 year 8.23%
Municipal Bond AA, 20 year 6.42%
Expected Annual Inflation Rate 3.00%
With reference to the data above, the default risk premium on the 90-day commercial paper above is
a. 3.39%
b. 0.17%
c. 0.64%
d. 1.84%
Answer
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