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problem: If ten year T-bonds have a yield of 5.2 percent, 10-year corporate bonds yield 7.5 percent, the maturity risk premium on all 10-year bonds is 1.1 percent, and corporate bonds have a 0.2 percent liquidity premium versus a zero liquidity premium for T-bonds, determine the default risk premium on the corporate bond?                                  

[A]       2.20%

[B]       2.30%

[C]       2.00%

[D]       2.10%

Basic Finance, Finance

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