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Your uncle is a a banker and he informed you the following information. A 10-year corporate bond has a yield of 14.26%; and a 10-year
Your uncle is a a banker and he informed you the following information. A 10-year corporate bond has a yield of 14.26%; and a 10-year Treasury bond has a yield of 4.29%;Inflation is expected to be 1.5% this year and 2.4% during the next nine years. Assuming that maturity risk premium is 0.5% for all long-term securities. Liquidity risk for corporate bonds is 4.66%. What should be default risk premium of this 10-year corporate bond? (Note, if your answer is 12.34%, just enter your answer as 12.34)
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