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A companys 5-year bonds are yielding 8.8% per year. Treasury bonds with the same maturity are yielding 6.2% per year, and the real risk-free rate (r*) is 2.60%. The average inflation premium is 3.20%, and the maturity risk premium is estimated to be 0.1 x (t-1)96, where t = number of years to maturity. If the liquidity premium is 1.15%, what is the default risk premium on the corporate bonds? Round your answer to two decimal places.

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Home nert Page Layout Formulas Data Review View dd-Ins Cut Σ AutoSum ー E ゴWrap Text ta copy. в 1 프· ー· 鱼, Δ. : rーー 逻锂函Merge & Center. $, % , 弼,8 Conditional Format eCell Insert Delete Formsat Sort &Find & 2 ClearFe Select Edting Format Painter Formatting, as Table w styles. ▼ ㆆ ▼ Clipboard Alignment Number Cells S219 AB AC AD 219 220 221 FORMULA FOR CALCULATING RATE FOR 5 YEAR BOND r-8.8%-r*+ IP + MRP + DRP + LP r* = 2.6% = REAL RISK FREE RATE IP-INFLATION PREMIUM = 3.2% MRP-MATURITY RISK PREMIUM-0.1 (t-1)%-0.1 (5-1)%-0.4% DRP = DEFAULT RISK PREMIUM = FIND OUT LP = LIQUIDITY PREMIUM-1.15% 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 8.8%-2.6% + 3.2% + 0.4% + DRP + 1.15% ANSWER DRP- 1.45% YIELD SPOT Sheet2 AFN BANKING NOTE BIDDING, UNDERWRITING EUAC Aw PM LIFE LP IP MRP. INFLATION YIELD WARRANT fund bond CLEAN INVOICE PRICE 14 - 福 130% 22-01-2019

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