A company's 5-year bonds are yielding 6% per year. Treasury bonds with the same maturity are yielding
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A company's 5-year bonds are yielding 6% per year. Treasury bonds with the same maturity are yielding 5.3% per year, and the real risk-free rate (r*) is 2.55%. The average inflation premium is 2.35%, and the maturity risk premium is estimated to be 0.1 (t - 1)%, where t = number of years to maturity. If the liquidity premium is 0.6%, what is the default risk premium on the corporate bonds? |
Related Book For
Fundamentals Of Corporate Finance
ISBN: 9780135811603
5th Edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford
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