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6-11 DEFAULT RISK PREMIUM A companys 5-year bonds are yielding 7 75% per year. Trea-sury bonds with the same maturity are yielding 52% per year,

6-11 DEFAULT RISK PREMIUM A companys 5-year bonds are yielding 7 75% per year. Trea-sury bonds with the same maturity are yielding 52% per year, and the real risk-free rate (r*)is 23%. The average inflation premium is 2 5%; and the maturity risk premium is estimatedto be 01 t 1%, where t = number of years to maturity. If the liquidity premium is 1%,what is the default risk premium on the corporate bonds?

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