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Suppose 10 -year T-bonds have a yield of 5.30% and 10 -year corporate bonds yield 8.50%. Also, corporate bonds have a 0.25% liquidity premium versus
Suppose 10 -year T-bonds have a yield of 5.30% and 10 -year corporate bonds yield 8.50%. Also, corporate bonds have a 0.25% liquidity premium versus a zero liquidity premium for T-bonds, and the maturity risk premium on both Treasury and corporate 10 -year bonds is 1.15%. What is the default risk premium on corporate bonds? 3.33% 2.95% 2.92% 2.68% 2.86%
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