A Corporation's 20-year bonds have an equilibrium rate of return of 8.00 percent. For all securities, the
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A Corporation's 20-year bonds have an equilibrium rate of return of 8.00 percent. For all securities, the inflation risk premium is 1.52 percent and the real interest rate is 3.27percent. The security's liquidity risk premium is .32 percent and maturity risk premium is .77 percent. The security has no special covenants. What is the bond's default risk premium?
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Financial Markets and Institutions
ISBN: 978-0077861667
6th edition
Authors: Anthony Saunders, Marcia Cornett
Posted Date: