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A Treasury bond that matures in 10 years has a yield of 6%,


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A 10-year corporate bond has a yield of 8.5%. Assume that the liquidity premium on the corporate bond is 0.65%. What is the default risk premium on the corporate bond? Round your answer to two decimal places.

Apr 19th, 2015

7.85%. If you take away the liquidity premium, you get only the default risk left as a reason for offering interest.

Apr 19th, 2015

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Apr 19th, 2015
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Apr 19th, 2015
Nov 18th, 2017
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