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If 10-year T-bonds have a yield of 6.1%, 10-year corporate bonds yield 8.6%, the maturity risk premium on all 10-year bonds is 1.3%, and corporate
If 10-year T-bonds have a yield of 6.1%, 10-year corporate bonds yield 8.6%, the maturity risk premium on all 10-year bonds is 1.3%, and corporate bonds have a 0.4% liquidity premium versus a zero liquidity premium for T-bonds, what is the default risk premium on the corporate bond? a) 0.8% Ob) 3.4% c) 1.6% d) 2.1% e) 2.5%
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