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Posted on May 18, 2024

A Treasury bond that matures in 1 0 years has a yield of 4 . 2 5 % . A 1 0 - year corporate

A Treasury bond that matures in

10

years has a yield of

4.25 % .

10 -

year corporate bond has a yield of

8.00 % .

Assume that the liquidity premium on the corporate bond is

0.40 % .

What is the default risk premium on the corporate bond? Round your answer to two decimal places.

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