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Debt securities offer varying yields dm M characteristics such as credit risk, liquidity, Mx sMtus, a

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Debt securities offer varying yields dm M characteristics such as credit risk, liquidity, Mx sMtus, a. term to maturity. For each 
&th following scenarios, determm which security wIlhave a higher y.1.1 and be more popular to Investors seeking a high return on Me), r Investment. Assume that other than the chirerences In characteNshrs menhoned, the secunbres are Klenbcal. 
Scenario 1 
Security 1, security with a Caa mhog from Moody's Investors Service. Security 2: P security with a rating from Standard a Poor, Corporation. 
 

Scenario 2 
Security 1: A Treasury bond Mat has a very active secondary market. S(.],IW1:a debt security that has a long-term maturity and that does not have a very active secondary market. 
0 secunry 0 secunty 
o 3 
Security 1: A taxable secunry .at offers a before-Mx yield of 6.9 percent, sold . an investor a marginal tax late of 18 percent. Security.. A tax-exempt security with a yield of 4 percent. 
0 secunry 0 secunry 
 

Scenario 4 
Security 1: A 10-year Treasury hand. Security 2: A 30-year Treasury hand. 
0 se.nry 
0 semnty 
 

Suppose Siveiker Incorporated is planning to massively expand inventory a. vvill issue 26-week mmmercial paper to obtain funding for .e expansion. Prior 03 issuing .e commercial paper, Shreiker Incorpomted at de.rmine .e yield that it must offer 03 successfully sell Me debt securities. Upon further analysis of .e key chamcteristics used . determine the appropria. yield of a security, Shrelker Incorporated I.ms the following: 1. Me annualized yield on a risk-free 26-week Treasury bill is 8 percent 2. A 2 percent credit risk premium is needed . mmpensate investors .r credit risk. 3. 
*0.3 percent liquidity premium is needed . compensate investors due to ite low liquidity of the Treasury .11s. 4.0 0.5 percent tax adjustment is needed to cornpensate investors for a difference in tax status. 
What is the appropria. yield he offered on Me commercial paper? 03.0000 0 10.20% 0 10.80% 004.0000