I need help in answering the following question: In the Federal Reserve Bulletin

Question

I need help in answering the following question: In the Federal Reserve Bulletin, find the average yield of AAA and BBB bonds for a recent month. Compute the risk premium (in basis points) and the percentage risk premium on BBB bonds relative to AAA bonds. The following is the data for both AAA and BBB bonds yield for the month of January 2015:

DATE VALUE -AAA Yield 2015-01-02 3.67 2015-01-05 3.59 2015-01-06 3.50 2015-01-07 3.51 2015-01-08 3.57 2015-01-09 3.53 2015-01-12 3.47 2015-01-13 3.49 2015-01-14 3.46 2015-01-15 3.44 2015-01-16 3.46 2015-01-19 #N/A 2015-01-20 3.42 2015-01-21 3.46 2015-01-22 3.51 2015-01-23 3.39 2015-01-26 3.41 2015-01-27 3.42 2015-01-28 3.33 2015-01-29 3.35 2015-01-30 3.29

Explanation / Answer

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AAA Yield BBB Yield 02-01-2015 3.67 02-01-2015 5.06 05-01-2015 3.59 05-01-2015 5.14 06-01-2015 3.5 06-01-2015 5.26 07-01-2015 3.51 07-01-2015 5.21 08-01-2015 3.57 08-01-2015 5.13 09-01-2015 3.53 09-01-2015 5.14 12-01-2015 3.47 12-01-2015 5.16 13-01-2015 3.49 13-01-2015 5.17 14-01-2015 3.46 14-01-2015 5.13 15-01-2015 3.44 15-01-2015 5.06 16-01-2015 3.46 19-01-2015 5.06 19-01-2015 3.46 20-01-2015 5.04 20-01-2015 3.42 21-01-2015 5.05 21-01-2015 3.46 22-01-2015 5.02 22-01-2015 3.51 23-01-2015 4.91 23-01-2015 3.39 26-01-2015 4.93 26-01-2015 3.41 27-01-2015 4.97 27-01-2015 3.42 28-01-2015 4.93 28-01-2015 3.33 29-01-2015 4.99 29-01-2015 3.35 30-01-2015 5.07 30-01-2015 3.29 31-01-2015 5.06 Average Yield 3.46 Average Yield 5.07 Risk Premium = BBB yield - AAA Yield = 1.61 Percentage Risk Premium = (Risk Premium/BBB Yield)*100= 31.70 %

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