Here we see the term structure of interest rates for treasury bonds 09/22/2021
Use the term structure to calculate price and required rate of return (yield) for the bonds in question listed below.
| Time | Interest rate |
| 0.5 | 2.209% |
| 1.0 | 2.209% |
| 1.5 | 2.568% |
| 2.0 | 2.803% |
| 2.5 | 2.943% |
| 3.0 | 3.138% |
| 3.5 | 3.288% |
| 4.0 | 3.429% |
| 4.5 | 3.558% |
| 5.0 | 3.661% |
| 5.5 | 3.745% |
| 6.0 | 3.816% |
| 6.5 | 3.875% |
| 7.0 | 3.926% |
| 7.5 | 3.973% |
| 8.0 | 4.014% |
| 8.5 | 4.051% |
| 9.0 | 4.083% |
| 9.5 | 4.112% |
| 10.0 | 4.139% |
| 10.5 | 4.162% |
| 11.0 | 4.184% |
| 11.5 | 4.204% |
| 12.0 | 4.222% |
| 12.5 | 4.238% |
| 13.0 | 4.254% |
– 10 year old gilt-edged coupon bond with 3.5% nominal interest rate, interest payments once a year.
– 10 year old gilt-edged coupon bond with 3.5% nominal interest rate, interest payments twice a year.
– 10 year old corporate coupon bond, nominal interest rate 5%, interest payments once a year. yield curve spread 1.5%
– What is the default risk premium on bond c. according to the traditional definition of default risk premium?
