extraCompensationForHigherRisk {bondAnalyst} | R Documentation |

Calculates desired extra compensation (in terms of bps) for a risky Bond as compared Annual Percentage Rate(APR) of a comparable Bond.

```
extraCompensationForHigherRisk(APRofRiskyBond, APRofComparableBond)
```

`APRofRiskyBond` |
A number. |

`APRofComparableBond` |
A number. |

The additional compensation for the greater risk in Bond B is 20.9 bps (0.10839 – 0.10630 = 0.00209) when the yields are stated on a semi-annual bond basis. The additional compensation is 20.4 bps (0.10696 – 0.10492 = 0.00204) when both are annualized for quarterly compounding (Adams & Smith, 2019).
In light of the information given, `extraCompensationForHigherRisk()`

desired extra compensation for a risky Bond as compared Annual Percentage Rate (APR) of a comparable Bond for values passed to its two arguments. Here, `APRofRiskyBond`

is given Annual Percentage Rate of risky bond, and `APRofComparableBond`

is given Annual Percentage Rate of comparable Bond. The output of 20.9 means 20.9 bps.

Input values to two arguments `APRofRiskyBond`

and `APRofComparableBond`

.

MaheshP Kumar, maheshparamjitkumar@gmail.com

Adams,J.F. & Smith,D.J.(2019). Introduction to fixed-income valuation. In CFA Program Curriculum 2020 Level I Volumes 1-6. (Vol. 5, pp. 107-151). Wiley Professional Development (P&T). ISBN 9781119593577, https://bookshelf.vitalsource.com/books/9781119593577

```
extraCompensationForHigherRisk(APRofRiskyBond=0.10839,APRofComparableBond=0.10630)
```

[Package *bondAnalyst* version 1.0.1 Index]