hard · CFA Level I Fixed Income
Amberfen Pharma bonds are currently yielding 5.5% while comparable government bonds yield 3.5%. An analyst decomposes the 200 bps spread into 80 bps for expected default loss and 40 bps for a liquidity premium.
The remaining 80 bps is most likely attributable to:
- A credit risk premium.
- Inflation expectations.
- The coupon rate of the bond.
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