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It is estimated that inflation will average 3.80% per year for the next 3 years, and average 4.00% each year thereafter. For a real risk-free

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It is estimated that inflation will average 3.80% per year for the next 3 years, and average 4.00% each year thereafter. For a real risk-free rate of 2.00%, what is the default risk premium of a 16-year corporate bond with a yield of 12.60% ? Assume that the liquidity premium is 3.00 %, but there is no maturity risk premium. 3.39% 3.75% O 3.97% O 3.28% O 3.64%

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