Question: Find the default risk premium for a debt security given the following information: inflation premium = 2.5 percent, maturity risk premium = 2.5 percent, real

Find the default risk premium for a debt security given the following information: inflation premium = 2.5 percent, maturity risk premium = 2.5 percent, real rate = 3 percent, liquidity premium = 1.5 percent, and market interest rate = 14 percent.

1.5%

4.0%

4.5%

2.0%

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