Question: ons Problem 6.11 (Default Risk Premium) eBook Question 9 of 15 Check My Work A company's 5-year bonds are yielding 7% per year. Treasury

ons Problem 6.11 (Default Risk Premium) eBook Question 9 of 15 Check

ons Problem 6.11 (Default Risk Premium) eBook Question 9 of 15 Check My Work A company's 5-year bonds are yielding 7% per year. Treasury bonds with the same maturity are yielding 4.9% per year, and the real risk-free rate (r*) is 2.25%. The average inflation premium is 2.25%, and the maturity risk premium is estimated to be 0.1 x (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? Round your answer to two decimal places. % Hide Feedback Incorrect

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