Bill is considering purchasing a 10-year treasury bond with, Ask an Expert

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Bill is considering purchasing a 10-year Treasury Bond with a yield of 6.4% or a 10-year corporate that yields 8.6%. The maturity risk premium on all 10-year bonds is 1.7%, and coporate bonds have a 0.3% liquidity premium versus a zero liquidity premium for the Treasury Bond. Use this informaton to tell Bill what the default risk premium is on the corporate bond.

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Financial Management, Finance

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