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Question:

A U.S. Treasury bond that matures in 10 years has a yield of 6%. A 10-yr corporate bond has a yield of 8%. Assume the liquidity premium on the corporate bond is 0.5%.

Required:

Question: What is the default risk premium on the corporate bond?

Note: Explain all steps comprehensively.

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  • Category:- Basic Finance
  • Reference No.:- M91149126

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