The Wall Street Journal reports that the current rate on
The Wall Street Journal reports that the current rate on 10-year Treasury bonds is 7.25 percent, on 20-year Treasury bonds is 7.85 percent, and on a 20-year corporate bond issued by MHM Corp. is 8.75 percent. Assume that the maturity risk premium is zero. If the default risk premium and liquidity risk premium on a 10-year corporate bond issued by MHM Corp. is the same as those on the 20-year corporate bond, calculate the current rate on MHM Corp.’s 10-year corporate bond.

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