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A company's 5-year bonds are yielding 6% per year. Treasury bonds with the same maturity are yielding 5.3% per year, and the real risk-free rate
A company's 5-year bonds are yielding 6% per year. Treasury bonds with the same maturity are yielding 5.3% per year, and the real risk-free rate (**) is 2.65%. The average Inflation premium is 2.25%, and the maturity risk premium is estimated to be 0.1 x (t-1)%, where to number of years to maturity. If the liquidity premium is 0.4%, what is the default risk premium on the corporate bonds? Round your answer to two decimal places. %
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