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6. Problem 6.13 (Default Risk Premium) eBook The real risk-free rate, r*, is 1.7%. Inflation is expected to average 1.6% a year for the next

6. Problem 6.13 (Default Risk Premium) eBook The real risk-free rate, r*, is 1.7%. Inflation is expected to average 1.6% a year for the next 4 years, after which time inflation is expected to average 5.1% a year. Assume that there is no maturity risk premium. A 10-year corporate bond has a yield of 8.9%, which includes a liquidity premium of 0.5%. What is its default risk premium? Do not round intermediate calculations. Round your answer to two decimal places. %

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