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primewire primewire
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7 months ago
The 30-day T-bill rate is 5%. SWC Company has just issued $100 million of commercial paper at par. There is a 0.1% chance the company will default on the issue. If the firm defaults, the commercial paper will be worth $5 million. Determine the yield spread between the T-bill rate and commercial paper assuming that the required return by investors in commercial paper is equal to the T-bill rate.
Textbook 
Corporate Finance

Corporate Finance


Edition: 5th
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rbacon2rbacon2
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7 months ago
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primewire Author
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7 months ago
Thank you, thank you, thank you!
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Just got PERFECT on my quiz
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