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A companys 5-year bonds yield 7% per year. Treasury bonds with the same maturity yield of 4.8% per year, and the average 5-year inflation premium
A companys 5-year bonds yield 7% per year. Treasury bonds with the same maturity yield of 4.8% per year, and the average 5-year inflation premium is 2.05%. Suppose maturity and liquidity risk premiums are zero. What is the default risk premium on the company's bond? Group of answer choices
a. 4.95%
b. 2.2%
c. It is not possible to answer the question without the real interest rates
d. 2.75%
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