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If a 10-year Treasury bond has a yield of 8%, and a 10-year corporate bond that is rated AA has a yeild of 10%, and
If a 10-year Treasury bond has a yield of 8%, and a 10-year corporate bond that is rated AA has a yeild of 10%, and the liquidity premium on the corporate bond is 1%, what is the default risk premium on the AA rated, 10-year corporate bond?
A. 1%
B 2%
C. .5%
D 1.5%
E 2.5%
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