If 10-year T-bonds have a yield of 6.2%, 10-year corporate bonds yield 9.8%, the maturity risk premium on all 10-year bonds is 1.3%, and corporate bonds have a 0.4% liquidity premium versus a zero liquidity premium for T-bonds, what is the default risk premium on the corporate bond?

a. 2.46%

b. 3.14%

c. 2.72%

d. 3.81%

e. 3.20%

Answer rating: 100% (QA)

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