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A corporate bond that matures in four years is currently yielding 6% while a T-bond of similar maturity is currently yielding 4.5%. Assume the liquidity

A corporate bond that matures in four years is currently yielding 6% while a T-bond of similar maturity is currently yielding 4.5%. Assume the liquidity premium for the corporate bond is 0.35%. What is the default risk premium on the corporate bond?

a. 1.15%

b. 1.3%

c.2.15%

d. 2.3%

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