Question: - Delay - H DEFAULT RISK PREMIUM A company's 5-year bonds are yielding 7.75% per year. Trea- sury bonds with the same maturity are yielding

- Delay - H DEFAULT RISK PREMIUM A company's 5-year bonds

- Delay - H DEFAULT RISK PREMIUM A company's 5-year bonds are yielding 7.75% per year. Trea- sury bonds with the same maturity are yielding 5.2% per year, and the real risk-free rate (r") is 2.3%. The average inflation premium is 2.5%; and the maturity risk premium is estimated to be 0.1 x (t-1)%, where t = number of years to maturity. If the liquidity what is the default risk premium on the corporate bonds? 8

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