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A 5-year corporate bond has a yield of 12%, while a 5-year Treasury bonds has a yield of 7.5%. The maturity risk premium on both
A 5-year corporate bond has a yield of 12%, while a 5-year Treasury bonds has a yield of 7.5%. The maturity risk premium on both bonds is 1.5%. The corporate bond also has a liquidity risk premium of 0.75%. How much is the default risk premium on the corporate bond?
4.5%
0.75%
3.75%
2.25%
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