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Problem 6-4 Default Risk Premium A Treasury bond that matures in 10 years has a yield of 4.25%. A 10-year corporate bond has a yield

Problem 6-4 Default Risk Premium

A Treasury bond that matures in 10 years has a yield of 4.25%. A 10-year corporate bond has a yield of 7.75%. Assume that the liquidity premium on the corporate bond is 0.5%. What is the default risk premium on the corporate bond? Round your answer to two decimal places.

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