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Jack Hancock Insurance company has invested in two securities a) a 15 year Treasury Bond yielding...

Jack Hancock Insurance company has invested in two securities a) a 15 year Treasury Bond yielding 6.20%, and b) a 15 year Admiral Motors A rated Corporate bond for which the default risk premium for a comparable security is 1.1% and the liquidity premium is .35%. The inflation premium is 3.5%. for a 15 year security. What is the yield for the Admiral Motors 15 year A rated Corporate bond?

Answer isnt 11.15%!

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Answer #1

Answer:- 15 year Yield for for Admiral Motors A Rated corporate bond 6.20% & litt. +0.35 7. = 7.65 %.

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