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Click here to read the eBook: The Determinants of Market Interest Rates DEFAULT RISK PREMIUM The real risk-free rate, ris 1.7%. Inflation is expected to

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Click here to read the eBook: The Determinants of Market Interest Rates DEFAULT RISK PREMIUM The real risk-free rate, ris 1.7%. Inflation is expected to average 3.2% a year for the next 4 years, after which time inflation is expected to average 2.8% a year. Assume that there is no maturity risk premium. An 8-year corporate bond has a yield of 8.45%, which includes a liquidity premium of 0.85%. What is its default risk premium? Do not round intermediate calculations. Round your answer to two decimal places. %

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