Corporate default seems to be an event specific to an individual company. Yet despite the apparent diversifiable

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Corporate default seems to be an event specific to an individual company. Yet despite the apparent diversifiable nature of corporate default (meaning that relatively few bonds would default in a well-diversified portfolio), the bond market systematically adds default premiums when valuing corporate bonds. Explain why.
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Fundamentals of Investments

ISBN: 978-0132926171

3rd edition

Authors: Gordon J. Alexander, William F. Sharpe, Jeffery V. Bailey

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