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If 10-year T-bonds have a yield of 6.5%, 10-year corporate bonds yield 8.5%, the maturity risk premium on all 10-year bonds is 1.5%, and corporate
If 10-year T-bonds have a yield of 6.5%, 10-year corporate bonds yield 8.5%, the maturity risk premium on all 10-year bonds is 1.5%, 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. 2.00%. B. 1.80% C. 3.50% D. 0.30
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