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Suppose 10-year U.S. Treasury bonds (T-bonds) have a yield of 5.30% and 10-year corporate bonds yield 6.65%. Also, corporate bonds have a 0.25% liquidity premium
Suppose 10-year U.S. Treasury bonds (T-bonds) have a yield of 5.30% and 10-year corporate bonds yield 6.65%. Also, corporate bonds have a 0.25% liquidity premium versus a zero liquidity premium for Treasury 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?
I dont have a financial calculator. Please show how to solve without a financial calculator.
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