The spread between the yield on a 3-year corporate bond and the yield on a similar riskfree bond is 50 basis points. The recovery rate is 30%. Estimate the average hazard rate per year over the 3-year period.
American Economy: T opic 4 What is money o Physically money can be anything o Physical money – over the years has been physically composed of every thing one can think of Medium of exchange – means must be readily accepted as a trade for a good or service Store of value – means money must be able to be sored and spent later Measure of value – means money must be able to distinguish between value of goods MI – the strictest definition of the money supply o Paper money – 19% o Coins – 1% o Demand deposits – 80% Nothing backs your money but confidence in the government that a dollar is worth a dollar Fiat money – term used to describe the fact that confidence in the government bac
