Problema particular securitys default risk premium is 6, Ask an Expert

Finance

Problem:

A particular security's default risk premium is 6 percent. For all securities the inflation risk premium is 3 percent and the real interest rate is 2.5 percent. The security's liquidity risk premium is 1 percent and maturity risk premium is 2 percent. The security has no special covenants.

Required

Question: What is the security's equilibrium rate of return?

Note: Please show how to work it out.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91162041

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