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Business, 06.06.2020 19:01 mikk33

A company's 5-year bonds are yielding 8.3% per year. Treasury bonds with the same maturity are yielding 5.2% per year, and the real risk-free rate (r*) is 2.15%. The average inflation premium is 2.65%, and the maturity risk premium is estimated to be 0.1 x (t - 1)%, where t = number of years to maturity. If the liquidity premium is 1.4%, what is the default risk premium on the corporate bonds? (Round your answer to two decimal places.)

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A company's 5-year bonds are yielding 8.3% per year. Treasury bonds with the same maturity are yield...
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