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6.2)Dakota Corporation 15-year bonds have an equilibrium rate of return of 10 percent. For all securities,...

6.2)Dakota Corporation 15-year bonds have an equilibrium rate of return of 10 percent. For all securities, the inflation risk premium is 1.80 percent and the real risk-free rate is 3.60 percent. The security’s liquidity risk premium is 1.25 percent and maturity risk premium is 1.85 percent. The security has no special covenants. Calculate the bond’s default risk premium. (Round your answer to 2 decimal places.)

Default risk premium______

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CALCULATIONS Equilibrium rate of return 0.1 Inflation risk premium 0.018 Real risk-free rate 0.036 Liquidity premium 0.0125 MEquilibrium rate of return 10% 1.80% 3.60% Inflation risk premium Real risk-free rate Liquidity premium Maturity risk premium

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