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What are the methods of bond yield plus risk premium?

幫考網(wǎng)校2020-10-12 14:50:49
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There are several methods of calculating bond yield plus risk premium:

1. Historical Method: This method involves analyzing historical data to estimate the average risk premium for a particular bond. This method is based on the assumption that past performance is a good indicator of future performance.

2. Market-Based Method: This method involves analyzing the current market conditions to estimate the risk premium for a particular bond. This method is based on the assumption that the market is efficient and that current prices reflect all available information.

3. Rating-Based Method: This method involves analyzing the credit rating of a bond issuer to estimate the risk premium for a particular bond. This method is based on the assumption that the credit rating is a good indicator of the riskiness of the bond.

4. Default Probability-Based Method: This method involves analyzing the probability of default for a particular bond to estimate the risk premium. This method is based on the assumption that the probability of default is a good indicator of the riskiness of the bond.
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