Question: 6. Problem 6.13 (Default Risk Premium) The real risk-free rate, r+, is 1.7%. Inflation is expected to average 1.5% a year for the next 4

6. Problem 6.13 (Default Risk Premium) The real risk-free rate, r+, is 1.7%. Inflation is expected to average 1.5% a year for the next 4 years, after which time inflation is expected to average 5.2% a year. Assume that there is no maturity risk premium. An 11 -year corporate bond has a yield of 9.9%, which includes a liquidity premium of 0.2% What is its default risk premium? Do not round intermedate calculations, Round your answer to two decimal places

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