A particular securitys equilibrium rate of return is 8 percent. For all securities, the inflation risk premium

Question:

A particular security’s equilibrium rate of return is 8 percent. For all securities, the inflation risk premium is 1.75 percent and the real risk-free rate is 3.5 percent. The security’s liquidity risk premium is 0.25 percent and risk premium is 0.85 percent. The security has no special covenants. Calculate the security’s default risk premium.

Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...