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8. Credit and Liquidity Risk

l. explain how changes in credit spread and liquidity affect yield-to-maturity of a bond and how duration and convexity can be used to estimate the price effect of the changes.

A change in yield-to-maturity will cause a change in X? Bond price

What are the two components of yield-to-maturity for a corporate bond? 1. Government benchmark yield 2. A spread over government benchmark.