Question
Stark Corporations bonds are currently yielding 8.91%. The expected inflation is 1.45% annually and the real risk-free rate is 1.88% per year for the next
Stark Corporations bonds are currently yielding 8.91%. The expected inflation is 1.45% annually and the real risk-free rate is 1.88% per year for the next 12 years. The liquidity risk premium is 1.79%. The maturity risk premium is 0.35% on 3 year securities and increases by 0.2 percent per year until maturity. What is the default risk premium on these bonds if they mature in 12 years?
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Focus On Personal Finance
Authors: Jack Kapoor, Les Dlabay, Robert J. Hughes, Melissa Hart
7th Edition
1265521972, 978-1265521974
