A Treasury bond that matures in 10 years has a yield of 4.00%. A 10-year corporate bond has a yield of 7.75%. Assume that the liquidity premium on the corporate bond is 0.50%. What is the default risk premium on the corporate bond? Round your answer to two decimal places.
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Default risk premium = Corporate bond yield - Treasury bond yield - Liquidity premium
Default risk premium = 7.75% - 4.00% - 0.50%
Default risk premium = 3.25%
A Treasury bond that matures in 10 years has a yield of 4.00%. A 10-year corporate...
A Treasury bond that matures in 10 years has a yield of 4.75%. A 10-year corporate bond has a yield of 6.70% Assume that the liquidity premium on the corporate bond is 0.6%. What is the default risk premium on the corporate bond? Round your answer to two decimal places. Your answer should be between 0.74 and 2.52, rounded to 2 decimal places, with no specia: characters
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