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The table below presents data on the yields of various fixed-income instruments for the past two ...

The table below presents data on the yields of various fixed-income instruments for the past two years (last year is denoted as T − 1 , whereas this year is considered as time T ). Use these data to answer the following questions: Instrument Maturity Yield in year T − 1 Yield in year T Treasury Bill 91 days 0.30% 0.50% AAA-rated Commercial Paper 91 days 0.60% 0.90% Treasury Bond 10 years 3.25% 2.75% AAA-rated Corporate Bond 10 years 5.30% 6.25% (a.) Assuming that yield reported on the Treasury bill was a discount yield, calculate the bond equivalent yield on the three-month T-bill in year T . (b.) What was the default premium on commercial paper last year?

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