[See Steps] On a given date, the yield-to-maturity on Baa corporate bonds was 10.61%. The yield-to-maturity was 7.94% for 3-month Treasury bills and 9.18%
Question: On a given date, the yield-to-maturity on Baa corporate bonds was 10.61%. The yield-to-maturity was 7.94% for 3-month Treasury bills and 9.18% for long-term Treasury securities.
- From this information, describe the general shape of the yield curve on that date.
- What is the default risk premium on the Baa corporate bonds?
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