Question
A companys 5-year bonds are yielding 7.75% per year. Treasury bonds with the same maturity are yielding 5.2% per year, and the real risk-free rate
A companys 5-year bonds are yielding 7.75% per year. Treasury bonds with the same maturity are yielding 5.2% per year, and the real risk-free rate is 2.35. The average inflation premium is 2.55; and the maturity risk premium is estimated to be 0.1 x (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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IT Auditing Using A System Perspective Premier Reference Source
Authors: Robert Elliot Davis
1st Edition
1799855481, 978-1799855484
