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QUESTION 24 A corporation is planning to sell its 90-day commercial paper to investors offering a 10.2 percent yield. If the liquidity premium is

QUESTION 24 A corporation is planning to sell its 90-day commercial paper to investors offering a 10.2 percent yield. If the liquidity premium is estimated to be 0.2 percent, and there is a 0.4 percent tax adjustment. Also, the three-month real annualized rate is 5.6 percent and expected inflation is 1.1 percent. What is the appropriate default premium? (Hint: use the Fisher formula to find the risk-free benchmark.) For example, if you find that the default premium is 3.5%, type "3.5" in the box. QUESTION 25

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