Question: A particular security's default problems risk premium is 2 percent. For all securities, the inflation risk premium is 1.75 percent and the real risk-free rate

A particular security's default problems risk premium is 2 percent. For all securities, the inflation risk premium is 1.75 percent and the real risk-free rate is 3.5 percent. The security's liquidity risk premium is 0.25 percent and risk premium is 0.85 percent. The security has no special covenants. Calculate the security's equilibrium rate of return.

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