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I am having a problem figuring out the question below. I have to show my work, but I can't figure out the equation and how
I am having a problem figuring out the question below. I have to show my work, but I can't figure out the equation and how to find MRP with the information given. Help please! Thank you.
QUESTION: A U.S. Treasury bond that matures in 10 years has a yield of 6%. A 10-yr corporate bond has a yield of 8%. Assume the liquidity premium on the corporate bond is 0.5%. What is the default risk premium on the coporate bond? (Hint: since both bonds have the same maturity, they will have the same MRP)
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