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If 10-year T-bonds have a yield of 5.0%, 10-year corporate bonds yield 9.5%, the maturity risk premium on all 10-year bonds is 2.0%, and corporate
If 10-year T-bonds have a yield of 5.0%, 10-year corporate bonds yield 9.5%, the maturity risk premium on all 10-year bonds is 2.0%, and corporate bonds have a 0.2% liquidity premium versus a zero liquidity premium for T-bonds, what is the default risk premium on the corporate bond? A. 2.30% B. 4.50% C. 4.30% D. 2.10%
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