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Green Mountain's 10-year bonds are currently yielding a return of 6.80 percent. The expected inflation premium is 1.20 percent annually and the real risk-free rate is expected to be 2.10 percent annually over the next ten years. The liquidity risk premium on Green Mountain's bonds is 0.30 percent. The maturity risk premium is 0.15 percent on 3-year securities and increases by 0.07 percent for each additional year to maturity. Calculate the default risk premium on Green Mountain's 10- year bonds. (Round your answer 2 decimal places.) Default risk premium __________ %

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92409676

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