Question: A 1 0 - year corporate bond has a spread of 1 5 0 bps . The cumulative probability of default over the ten years

A 10-year corporate bond has a spread of 150 bps. The cumulative probability of default over the ten years is 3%, and the recovery if the bond defaults is expected to be 50%. Roughly how much of the spread is payment for default and how much is the risk premium? You can approximate.

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