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The real risk-free rate is 3.5%. Inflation is expected to average 3.2% a year for the next 3 years, thereafter inflation is expected to average

The real risk-free rate is 3.5%. Inflation is expected to average 3.2% a year for the next 3 years, thereafter inflation is expected to average 4.2% a year. A 12-year corporate bond has a yield of 9.3%. Assume that there is no maturity risk premium. The liquidity premium on the corporate bond is 0.2%. What is the default risk premium?

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