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Suppose a 1 0 - year corporate bond yields 1 2 % , a 1 0 - year Treasury note yields 7 % , the

Suppose a 10-year corporate bond yields 12%, a 10-year Treasury note yields 7%, the 3-month T-bill yields 3%, and inflation =2%. Determine the risk-free rate of return, the real risk-free rate of return, the maturity risk premium and the default risk premium.

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