(15) 8. In evaluating credit risk, discuss the statement: "An increase in collateral is a direct substitute for an increase in default risk." In your discussion, evaluate the credit risk premium on a one-year loan with and without collateral using the following formula and values: (1+i) 1 7 + p-py k-i- Risk Premium: -1+) where, k = required yield on a risky loan, i = 0.1 (default risk free interest rate), (1-p) = 0.1 (probability of default over the year), and y = 0.9 (the portion of the loan collateralized)