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DEFAULT RISK PREMIUM A Treasury bond that matures in 10 years has a yield of 6.5%. A 10-year corporate bond has a yield of 8.5%.

DEFAULT RISK PREMIUM A Treasury bond that matures in 10 years has a yield of 6.5%. A 10-year corporate bond has a yield of 8.5%. Assume that the liquidity premium on the corporate bond is 1%. What is the default risk premium on the corporate bond?

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