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

A Treasury bond that matures in

10

years has a yield of

5 % .

10 -

year corporate bond has a yield of

9 % .

Assume that the liquidity premium on the corporate bond is

0.6 % .

What is the default risk premium on the corporate bond?

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